An internal watchdog has reported that the Federal Reserve mismanaged costs associated with a $2.4 billion renovation of its Washington, D.C. headquarters, but found no criminal violations. The report was released on Wednesday and comes after a year of scrutiny from Donald Trump, who has used the renovations as a focal point in his criticism of the Fed and former chair Jerome Powell.

Key Findings

  • The Fed’s board of governors “has not effectively managed” the construction project.
  • The project has deviated from its cost-management provisions.
  • Despite mismanagement, no criminal violations or administrative misconduct were identified.
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“At no point during our evaluation did we find reasonable grounds to believe that a violation of federal criminal law had occurred,” the report stated.

Renovation Costs

The renovation costs have escalated significantly, rising from an initially budgeted $921 million in February 2020 to $2.018 billion by December 2024. Originally scheduled for completion in mid-2024, the project is now expected to extend until December 2027.

These renovations have fueled tensions between the White House and the Fed, which is mandated to operate independently and without political influence. Trump has persistently pressured the Fed to lower interest rates, but to no avail.