The Federal Reserve’s inspector general has found no grounds for a criminal referral or evidence of administrative misconduct tied to a costly United States central bank renovation project that became a focal point of President Donald Trump’s pressure campaign against former Federal Reserve Chair Jerome Powell. The watchdog released its findings on Wednesday after reviewing the renovation of two venerable Fed buildings in Washington, DC. The project has run roughly $1bn over budget, bringing its estimated cost to about $2.4bn.
Trump repeatedly used the renovation costs to attack Powell during his time as Fed chief. The president had consistently pressured Powell to lower interest rates. A US Department of Justice investigation into the project and Powell’s congressional testimony was closed earlier this year after a federal judge agreed with Powell that they were a pretext for pressuring the Fed chief to lower interest rates.
This most recent watchdog report has identified significant shortcomings in the Fed’s management of the project, including its failure to establish an intended “guaranteed maximum price” that would have shifted responsibility for cost overruns to the contractor. It also found that design features criticised by the White House, including marble, water features and a garden terrace, “did not materially contribute” to the overruns. Cost overruns on government projects are common, with Trump’s budget for White House ballroom construction having doubled from initial estimates.
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