Federal Reserve watchdog finds mismanagement but no criminal wrongdoing in renovation

The Federal Reserve’s internal watchdog has concluded that the agency broadly mismanaged a $2.4 billion building renovation project, but found no criminal violations.

In a 120‑page report released on Wednesday, the inspector general said the Board of Governors failed to secure a comprehensive cost estimate or a maximum overall cost at the start of the project, steps that could have shifted inflationary pressure onto the contractor.

Construction began in 2022 and prices rose sharply, with costs for renovating two Fed buildings more than doubling from an original estimate of $921 million in February 2020 to $2.018 billion by December 2024. The project, now expected to finish in December 2027, is well beyond its original mid‑2024 target.

The report noted that design changes in 2023, shifting from an open‑plan workspace to mostly closed offices, caused significant delays and prevented the Fed from setting a cost ceiling. Features criticised by the Trump administration, such as water fountains and marble facades, were not major cost drivers.

Former Chair Jerome Powell had asked for the review last year. Earlier investigations by the Justice Department into alleged perjury by Powell were dropped in April after a judge quashed subpoenas.

The inspector general stated, “At no point during our evaluation did we find reasonable grounds to believe that a violation of federal criminal law had occurred requiring a referral to the U.S. Attorney General.”

Source: ABC News. Photo: K / Pexels.