Trump's Criminal Referral Against Powell Falls Through After Fed Report

For months, Donald Trump targeted Jerome Powell regarding the Federal Reserve's $2.4 billion headquarters renovation, alleging wasteful spending and calling for a criminal probe into Powell's congressional testimony on the matter.

The Fed's inspector general has now concluded there is no proof that Powell violated any criminal law or acted improperly in his administrative role.

The 120-page investigation instead highlights long-running issues with project oversight, repeated design alterations, and inadequate cost management within the institution.

The renovation's budget soared from $1.317 billion in 2020 to $2.381 billion by the end of 2024. Spending on construction more than doubled over the same period, reaching $2.018 billion from an initial $921 million.

How the Fed Lost Control of the Project

A key finding is that the Fed selected a contract type intended to limit construction expenses but never established that limit.

As of July 2026, after four years of work and over $2 billion in awarded contracts, the project lacked a guaranteed maximum price.

The shift from an open-plan layout to private offices added 21 months to the design phase. The project, initially slated for completion in 2024, is now expected to finish in December 2027.

Still, the inspector general determined that allegations of extravagant spending were not the cause of the budget overrun. Features such as marble, fountains, and a garden terrace were mostly part of the original plans and did not significantly contribute to subsequent cost growth.

NEW: The Fed's inspector general finds no administrative misconduct and no grounds for a criminal referral over the central bank's headquarters renovation, ending the formal legal threat to Jerome Powell.

The 120-page report is critical of how the Fed managed the project but…
— Nick Timiraos (@NickTimiraos) September 30, 2026

The Case Against Powell Is Now Over

Regarding the criminal aspect, the inspector general did not mince words.

“At no point during our evaluation did we find reasonable grounds to believe that a violation of federal criminal law had occurred,” the report said.

It also concluded that no administrative wrongdoing took place.

The Department of Justice launched an inquiry in January regarding Powell's 2025 Senate testimony. A federal judge subsequently invalidated the subpoenas, noting there was "essentially zero evidence" of a crime, and prosecutors abandoned the case in April.

Powell had stated he would stay on the Federal Reserve Board until the matter concluded.

“I will not leave the Board until this investigation is well and truly over, with transparency and finality,” he said in April.

That condition has now essentially been satisfied. The remaining question is whether Powell will remain until his term as governor ends in January 2028.