Fed Watchdog Clears Powell, but Trump Demits Resignation Over $2.4B Renovation

Key points

• The Fed’s Inspector General found no grounds for criminal referral or administrative misconduct in the renovation project, which cost approximately $2.4 billion.
• The report cited poor management, including the failure to establish a 'guaranteed maximum price' contract, leading to a $1 billion cost overrun.
• President Trump demanded Powell’s resignation, calling him incompetent and threatening to sue the former Chair for corruption or incompetence.
• New Fed Chair Kevin Warsh accepted the report’s recommendations, including hiring an independent auditor to verify costs and compliance.
• Powell, who remains a Fed governor, declined to comment, stating he will not leave the Board until the investigation is concluded with transparency.

Background

The renovation project, which began in 2022, became a focal point for Trump’s criticism of the Fed’s monetary policy. In January 2026, the Department of Justice issued subpoenas to the Fed Board, which a federal judge later quashed in March, ruling they were a pretext to pressure Powell. Powell stepped down as Fed Chair in May 2026 but remained on the Board of Governors.

How outlets are covering it

France 24 and The New York Times emphasize the Inspector General’s finding of no misconduct, while highlighting Trump’s continued pressure on Powell. Politico notes that the report makes it harder for Trump to remove Powell, as the findings lack legal grounds for dismissal. All sources agree that the report criticized the Fed’s management but cleared Powell of wrongdoing.

Why it matters

The report’s findings could influence the Fed’s independence and monetary policy direction. Trump’s continued pressure on Powell may affect interest rate decisions and the central bank’s relationship with the White House.

What to watch

Attorney General Todd Blanche is reviewing the report to determine next steps. Kevin Warsh is expected to implement the report’s recommendations, including an independent audit. Powell’s future at the Fed remains uncertain, as he has stated he will not leave until the investigation is concluded.