Federal Reserve Inspector General Finds No Criminal Violation in Costly Renovation Project
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The Federal Reserve's Office of the Inspector General concluded that there was no reasonable basis to allege federal criminal law violations in the multi-billion-dollar renovation of its Washington, D.C., campus, though it cited management shortcomings.
Washington — The Office of the Inspector General for the Federal Reserve Board released a 120-page report stating that the multi-billion-dollar renovation of the central bank’s Washington, D.C., campus did not involve any administrative misconduct or reasonable grounds for a federal criminal violation. The review, which concluded after more than a year of investigation, noted that the Board failed to establish a guaranteed maximum price and had insufficient internal governance for a project of this scale.
The watchdog attributed cost overruns to inflation, limited subcontractor competition, extensive design changes, and challenging site conditions. It also highlighted a shift from closed offices to open workspaces after construction began as a management lapse that extended the project’s timeline and exposure to rising costs.
Board Chairman Kevin Warsh, in a letter to Inspector General Michael Horowitz, affirmed the need to complete the work efficiently and transparently, and announced that the General Services Administration would assume project executive responsibilities. "The American people are owed a prudent and conscientious use of public funds," Warsh said.
Senator Tim Scott, who chairs the Senate Banking Committee, welcomed the findings, emphasizing that inflation does not excuse the Fed from prudent resource management. "We will continue rigorous oversight to ensure the Fed is transparent and stays focused on its mission," he added.
The renovation, which has been a point of contention in political and congressional hearings, was defended by former Fed Chair Jerome Powell, who said the project did not include new marble, VIP dining rooms, special elevators, water features, or rooftop gardens, and that any design changes were necessary to address unforeseen conditions such as asbestos.
The report concluded without identifying any criminal conduct, effectively closing the investigation that had been prompted by earlier allegations and subpoenas that were later dismissed by a federal judge.