Fed watchdog clears Powell of crimes in $2.4B renovation scandal, but Trump vows legal action

Key points

• The Fed inspector general concluded there were no reasonable grounds to believe federal criminal law was violated or that Board policy was breached during the renovation project.
• The renovation cost has nearly doubled from 2020 estimates, reaching approximately $2.4 billion, with the report citing a lack of price caps and poor monitoring by the Fed board.
• President Trump dismissed the report’s exoneration of Powell, stating on Truth Social that Powell should be sued by the US government for corruption or incompetence if he does not resign.
• The report found that controversial design elements, such as water fountains and marble restoration, did not materially contribute to the significant cost increases.
• New Fed Chair Kevin Warsh agreed to implement seven corrective actions, including an audit of the contractor and oversight by the General Services Administration.
• Powell, who stepped down as chair in May but remains on the board, stated he would stay until the investigation is 'well and truly over with transparency and finality.'

Background

This development follows a months-long campaign by President Trump to pressure Jerome Powell, who was nominated by Trump in 2017 but later clashed over interest rate policies. Trump had previously visited the Fed headquarters to inspect the renovations and fact-checked cost estimates publicly. A criminal probe by the Justice Department into Powell was briefly opened but suspended amid backlash from some Republican lawmakers. The current tension is part of a broader pattern of Trump attempting to influence the Federal Reserve’s independence, including recent conflicts over interest rate hikes under new Chair Kevin Warsh, as noted in our archive from September 2026.

How outlets are covering it

CNN and AP News emphasize the inspector general’s finding that no crimes occurred, framing it as a significant setback for Trump’s legal pressure on Powell. CNN highlights that the report blamed the Fed board collectively rather than individuals, while AP focuses on the mismanagement aspect. Politico underscores Trump’s refusal to accept the findings, quoting his demand for Powell’s resignation and potential lawsuits. All sources agree that the report criticized the Fed’s cost control measures but diverge in emphasis: CNN and AP focus on the exoneration of Powell, while Politico highlights the political fallout and Trump’s continued attacks. The sources also note that the report cleared specific design features that Trump and congressional Republicans had previously highlighted as evidence of extravagance.

Why it matters

The report’s findings impact the ongoing debate over the independence of the Federal Reserve and the extent of presidential influence over monetary policy. Trump’s continued pressure on Powell, despite the exoneration, signals a potential escalation in the conflict between the executive branch and the central bank. The involvement of the General Services Administration in overseeing the renovation marks a notable shift in the Fed’s operations, potentially setting a precedent for external oversight of the central bank’s internal projects. The outcome may influence future interactions between the White House and the Federal Reserve, particularly regarding interest rate decisions and board appointments.

What to watch

Attorney General Todd Blanche is expected to review the inspector general’s report and determine next steps regarding the renovation project. The General Services Administration will oversee the completion of the renovations, as agreed by Kevin Warsh. Jerome Powell is expected to remain on the Fed board until the investigation is fully resolved, as per his statement. The Justice Department may reconsider its stance on the suspended criminal probe, though the inspector general’s findings suggest no basis for reopening it. Trump may continue to press for Powell’s resignation or pursue legal action, as indicated by his recent statements.