Fed watchdog finds renovation failures, no misconduct by Powell

The Federal Reserve’s inspector general concluded Wednesday that mismanagement helped drive large cost overruns on the central bank’s Washington headquarters renovation, but said the probe found no basis for a criminal referral and no administrative misconduct — a finding that did not stop President Trump from demanding Jerome Powell leave the Fed board.

Cost and oversight: CNBC, citing the report, said the Fed estimated the project at about $1.3 billion in 2020 and that the board-approved budget had risen to about $2.4 billion as of August 2026, with construction costs alone up about $960 million; CBS described the price tag as nearly $2.5 billion. Reuters said plumbing and air-conditioning work ultimately cost about $346 million — triple an earlier estimate — and that the Fed never effectively locked in a “guaranteed maximum price” contract. The IG also said design elements critics highlighted, such as marble, water features, and a garden terrace, “did not materially contribute” to the overruns, Reuters and CBS reported.

Trump’s response: After the report, Trump posted on Truth Social that Powell should be “forced to resign” from the Board of Governors “at a minimum,” blamed him for the project, and said he had asked Attorney General Todd Blanche to “study” the IG findings, CNBC reported. Trump added that if Powell does not resign, he “should be sued” by the federal government “for either corruption or incompetence,” Reuters and The Hill reported. Powell, who left the chairmanship in May but remains a governor, had said in April he would stay until the investigation was “well and truly over”; CNBC noted he can remain on the board through January 2028. Reuters said Powell declined to comment on the report.

Institutional reaction: Fed Chair Kevin Warsh said he would follow the report’s recommendations, move toward an independent audit of awarded costs, and bring in the General Services Administration on the project, Reuters and CBS reported. Sen. Tim Scott (R-S.C.), who chairs Senate Banking, called the overruns “egregious” and promised oversight; Sen. Elizabeth Warren (D-Mass.) said the findings showed “no basis to restart the president’s witch hunt” against Powell. U.S. Attorney Jeanine Pirro’s office said it had received the report and was reviewing it, Reuters said.

Primary sourcing: Reuters (Howard Schneider, Michael S. Derby, Ann Saphir), Sep 30, 2026 — no criminal referral/admin misconduct; ~$1B overrun; ~$2.4B price tag; plumbing/HVAC $346M (triple estimate); marble/water features/garden terrace did not materially contribute; Jefferson role; Warsh independent auditor; Scott and Warren quotes; Pirro office reviewing. CNBC (Matt Peterson), Sep 30, 2026 1:00 PM EDT — 2020 estimate $1.3B to $2.4B board-approved as of Aug 2026; construction costs +$960M; plumbing/HVAC +223%; Trump Truth Social demanding Powell resign and asking AG Todd Blanche to study report; White House spokesman Kush Desai statement; Powell can remain through January 2028; Horowitz appointed June 2025. CBS News (Richard Escobedo), Sep 30, 2026 — 121-page report; Horowitz; GSA retained as project executive per Warsh letter; design features (private elevator, marble, garden terrace, skylights) did not materially contribute; nearly $2.5B figure used by CBS (Reuters/CNBC cite ~$2.4B). Budget figures differ slightly across outlets; we cite ~$2.4B board-approved and note CBS’s nearly $2.5B framing. Intraday political reactions may continue. ~5:05 p.m. PT: added Trump’s “should be sued” line per Reuters and The Hill; Powell still declined comment per Reuters.