The Federal Reserve’s headquarters renovation in Washington is now a roughly $2.5 billion project. On Wednesday, Sept. 30, the Fed’s own inspector general released a 121-page report on how it got that way.
The verdict was mixed. The watchdog found no crimes and cleared former Fed Chair Jerome Powell of wrongdoing. But it also found that the Fed’s management of the project fell short in ways that let costs run far past the original budget. President Trump responded by demanding that Powell resign from the Fed’s board.
How the price tag nearly doubled
According to Yahoo Finance, the project’s budget was $1.317 billion in February 2020. By December 2024 it had grown to $2.381 billion. Construction costs alone more than doubled over that period, from $921 million to $2.018 billion.
Axios reports that the contracts for mechanical, electrical and plumbing work came in at $539 million, about triple the $178 million estimate. Fox Business reports that the project is expected to be finished in December 2027.
Some of the increase had causes outside the Fed’s control. Fox Business notes the report pointed to higher prices for materials and labor, design changes demanded by outside review agencies, and surprises like unexpected asbestos, contaminated soil and high water tables. CBS News reports the inspector general said inflation “was clearly a factor,” but that the cost increases went beyond inflation.
Where the Fed fell short
The report laid much of the blame on management. According to CBS News, the Fed did not get initial construction cost estimates from contractors and did not set cost limits up front. Fox Business reports the Fed also failed to use guaranteed maximum price contracts and did not seek enough competitive bids on major pieces of the work.
Yahoo Finance reports the watchdog called the board’s internal oversight “fundamentally insufficient” for a project of this size. The Fed had adopted safeguards after problems with an earlier renovation of its Martin building, but it repeated similar mistakes anyway. Axios reports the inspector general said the Fed “did not take numerous actions available to it that could have better controlled costs.”
The White House had attacked the plans for features like rooftop terrace gardens, VIP dining rooms and elevators, water features and premium marble. CBS News reports the inspector general concluded those features “did not materially contribute” to the cost increases.
The watchdog recommended guaranteed maximum pricing, clear cost and schedule benchmarks, a new oversight body that reports directly to the board, and an effort to recover money for services the Fed paid for but never received, according to Yahoo Finance.
No crimes found
On the legal question, the report was clear. “At no point during our evaluation did we find reasonable grounds to believe that a violation of federal criminal law had occurred,” the inspector general wrote, as quoted by Fox Business and CBS News.
That matters because of Powell’s history with the project. Axios reports the Justice Department opened a criminal investigation in January 2026 into Powell’s June 2025 testimony to Congress about the renovation costs, then closed it in April. Powell’s term as chair ended in May 2026, and Kevin Warsh now leads the Fed. Powell stayed on the board, saying he wanted to see the review through. The Bond Buyer reports his term as a governor runs until January 2028.
The reaction
President Trump wasn’t satisfied. “The Building is over budget, at a Record Setting rate and, at a minimum, ‘Too Late’ Powell should be forced to resign from the Board,” he wrote on Truth Social, according to The Bond Buyer. CBS News reports he also asked Attorney General Todd Blanche to review the report and “make a determination” about next steps.
Senate Banking Committee Chairman Tim Scott, R-S.C., also called for accountability. “Inflation does not change the Fed’s responsibility to manage its resources prudently,” he said, according to Yahoo Finance.
The bottom line
“No crimes” is a low bar for a public institution. The inspector general’s own findings describe a project that nearly doubled in cost on management choices any small business owner would recognize as mistakes: no firm price caps, too little competitive bidding, and oversight the watchdog itself called insufficient. The Fed had already learned these lessons on an earlier renovation and repeated them anyway.
The Federal Reserve sets interest rates for every family, farm and business in America, and it guards its independence closely. Independence on monetary policy should not mean freedom from accountability on how it spends money. If a $1.3 billion budget can become $2.4 billion with no one at fault, Americans have a right to ask who was minding the store.
The Fed under new leadership now has a list of fixes in hand. Congress, led by Chairman Scott’s committee, should make sure they are actually carried out, and that the remaining work through 2027 comes in on budget.
Sources
- CBS News: Fed watchdog finds no laws broken in $2.5 billion Fed renovations (Sept. 30, 2026)
- Fox Business: The final verdict is in for the Fed’s troubled renovation and Jerome Powell (Sept. 30, 2026)
- Yahoo Finance: Fed’s $2.5 billion renovation broke no laws, but watchdog blasts cost overruns (Sept. 30, 2026)
- Axios: Fed watchdog clears former chair Powell in renovation probe (Sept. 30, 2026)
- The Bond Buyer: Trump says IG report means Powell must be “forced to resign” (Oct. 1, 2026)