The Federal Reserve’s own watchdog concluded that management and oversight failures helped drive major cost overruns on the central bank’s headquarters renovation, while finding no reasonable grounds for a criminal referral. The Office of Inspector General report, released Wednesday and led by Inspector General Michael Horowitz, examined the work on the historic Eccles building in Washington, D.C.
The findings land after months of political and legal friction over the project’s ballooning price tag, prior criminal scrutiny of former Chair Jerome Powell, and sharp public pressure from President Donald Trump. For conservatives tracking institutional accountability and the use of public money, the report draws a hard line between poor project control and criminal wrongdoing.
CNBC reported that the Fed’s 2025 budget allocated $2.5 billion to the Eccles renovation, about $700 million above earlier estimates, with overall costs described as having ballooned by roughly a billion dollars from initial estimates. The Board of Governors declined to comment on the report.
The OIG evaluation tied the overruns to management and oversight failures. It also noted design changes, differences in materials and labor costs, and poor environmental conditions as factors the Fed had pointed to on the higher costs.
On the core legal question that had hung over the project, the report was direct.
The Fed OIG 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 in accordance with the Inspector General Act."
The watchdog also addressed how the project was run day to day. The report said the Fed board was not involved in day-to-day decisions about the project and added that such delegation was expected.
The OIG wrote:
"Indeed, we would expect the board to delegate the day-to-day management of a large construction project."
Investigators reviewed materials related to Powell’s Senate testimony on the project. The report makes no claims about any misconduct related to that testimony.
Powell testified to the Senate about the project in June 2025. Critics had accused him of mismanaging the renovation and misleading Congress. Some alleged perjury tied to that appearance.
That same month, Powell appointed Horowitz as Fed inspector general. Roughly a month later, Powell requested the investigation. The review had been underway since July 2025.
On July 24, 2025, Trump and Powell toured the construction site together. Trump had sharply criticized Powell over the issue and long argued the Fed ought to lower rates. He called the board “hostile,” blamed a recent interest-rate increase on that board, and insisted there was “criminality” involved in the renovation problem.
In January, Powell said in a video statement that a criminal investigation related to the renovation was a pretext to force him to lower interest rates. The full verbatim text of that statement was not provided in the documentation beyond that description.
In December, U.S. Attorney for the District of Columbia Jeanine Pirro opened a criminal investigation into Powell and the Fed over the renovation. In March, Chief Judge James E. Boasberg quashed subpoenas Pirro had issued to the Fed. The judge found evidence the subpoenas were intended to “harass and pressure Powell” over interest rates, but no evidence of any wrongdoing on Powell’s part.
In April, Pirro agreed to drop the investigation to clear the way for confirmation of Kevin Warsh as Fed chair. She said she was awaiting the IG report and would consider reopening. She did not immediately respond to requests for comment on the IG report itself.
Pirro had said:
"I will not hesitate to restart a criminal investigation should the facts warrant doing so."
Republican senators present for Powell’s testimony said they do not believe he committed a crime in that hearing. Sen. Tim Scott, R-S.C., addressed the point in a February Fox Business interview.
Scott said, “I was the one asking the questions,” and stated he found Powell inept, but added, “I do not believe that he committed a crime during the hearing.”
That distinction matters for any future charging theory. An inspector general finding of management failure is not a finding of criminal intent, and the OIG report expressly declined a criminal referral standard under the Inspector General Act.
Warsh, Trump’s new Fed chair, welcomed the findings in a letter published with the report and said the Fed would take steps to adopt the report’s recommendations. Full verbatim letter text beyond that description was not included in the documentation.
Warsh plans to conduct a full audit of the renovation and has asked the General Services Administration to serve as the project executive going forward. Before his selection, he had described the cost overruns as “outrageous” in a Fox interview.
After confirmation, at a June press conference, Warsh said he was looking forward to reading the report and said his focus was on “what we can to be good stewards of taxpayer money.”
The Fed is self-funded and manages its own budget, which has long complicated ordinary appropriations-style oversight. Bringing in the GSA as project executive is a concrete shift in who runs the remaining work.
Powell finished his term as chair on schedule after the judge blocked the criminal investigation route that had been opened. He remains on the Fed board as a governor, with that term ending in January 2028.
The Department of Justice could, in theory, look again if new facts emerged. Pirro left the door open to restart a probe if warranted. The OIG evaluation, however, stated it found no reasonable grounds during its work to believe a federal criminal law violation had occurred that required referral to the attorney general.
Authorities have not publicly announced a decision to reopen a criminal case based on this report. Investigators and prosecutors would need fresh evidence meeting criminal standards, not merely confirmation that a large construction job ran far over early estimates.
No public results have been released that convert the OIG’s management findings into a charging document. The report’s operative legal conclusion is the absence of a criminal referral basis under the Inspector General Act standard it applied.
Even without a crime referral, the scale is hard to ignore. A $2.5 billion 2025 budget line for the Eccles work, roughly $700 million above earlier estimates, and a roughly billion-dollar climb from initial estimates put real pressure on claims of careful stewardship.
The OIG did not treat the board’s distance from daily construction decisions as inherently improper. It said such delegation is expected on a large project. It did find that management and oversight failures contributed to the overruns.
That is the accountability lane still open: audit the books, install stronger project control, and measure whether Warsh’s GSA move and promised adoption of the report’s recommendations actually stop the bleed. Congress designed the Fed to be independent from the rest of the executive branch, which is why inspector general work and public budget figures carry extra weight when criminal law is not triggered.
Powell’s June 2025 testimony, the later OIG document review, and Scott’s firsthand account of the hearing all cut against a clean perjury narrative in the public record described here. Trump’s insistence on “criminality” set a high bar. The watchdog’s report did not meet that bar for referral.
What remains is institutional cleanup. Cost control on a flagship federal renovation is not optional just because the central bank sits outside the normal appropriations fight. Taxpayers still fund the system that pays the bills.
When a central bank cannot keep a headquarters project inside early estimates by a billion-dollar margin, the remedy is tighter control and visible consequences for failure, not another media cycle that confuses waste with a crime that investigators declined to refer.
