Federal Reserve renovation overruns hit $2

The Federal Reserve's inspector general concluded there were no reasonable grounds to believe federal criminal law was violated in the headquarters renovation project. The watchdog released its 120-page report on Wednesday morning, also finding no evidence of administrative misconduct. A separate Department of Justice criminal investigation into the project and Chair Jerome Powell's testimony was closed in April.

Project details reveal massive cost overruns and delays

The renovation of the Federal Reserve's Washington DC headquarters began with a $921 million budget in February 2020. Construction costs had reached $2.018 billion by December 2024. The estimated total cost is about $2.4 billion. The project ran roughly $1 billion over budget. Construction was supposed to be completed in mid-2024 but is now slated for December 2027.

Governance failures and design changes contributed to overruns

The Fed's board of governors has not effectively managed the construction project. It repeatedly deviated from its cost-management provisions. Even after four years of construction and over $2 billion in awarded costs, the board had not established a guaranteed maximum price. That contract feature would have shifted cost overrun responsibility to the contractor. The board had set up insufficient internal project governance for a project of such magnitude and complexity.

Cost overruns resulted from inflation, limited subcontractor bidding, substantial interior fit-out design changes, and challenging site conditions. A major shift from closed offices to open workspaces after construction began extended the project's duration and exposure to inflationary pressures. Several criticized design components-marble, water features, and a garden terrace-did not materially contribute to subsequent cost increases. Removing four water features would not yield significant savings because landscaping and other costs would be needed for replacement.

Political conflict escalates as Trump and allies criticize Powell and the project

Former President Donald Trump has repeatedly used the renovation costs to attack former Fed Chair Jerome Powell. Trump consistently pressured Powell to lower interest rates. He visited the Fed's headquarters in July 2025 and wore a hardhat at the construction site. Trump said the renovation looked like it was about $3.1 billion. Powell responded, "I am not aware of that."

Trump took to social media on Wednesday afternoon and called on Powell to resign. He wrote: 'He can’t manage a Building, and he certainly shouldn’t be allowed to manage his High Interest Rate Policy.' Trump added: 'If he doesn’t resign, he should be sued, at the highest level.' He had earlier argued Powell should be forced to resign from the Board of Governors at a minimum. Trump later targeted Fed Governor Lisa Cook, attempting to fire her over mortgage fraud allegations. The Supreme Court ruled that firing unconstitutional due to improper procedure.

The renovation became a point of contention during a June 25, 2025, Senate hearing. Sen. Tim Scott, R-S.C., accused Powell of spending billions on lavish renovations including rooftop terraces, custom elevators opening into VIP dining rooms, white marble finishes, and a private art collection. Powell denied Scott’s accusations, stating there was no VIP dining room, no new marble, no special elevators, no beehives, and no roof terrace gardens. Scott later welcomed the inspector general’s findings and stated inflation does not change the Fed’s responsibility to manage resources prudently.

Shortly after the June hearing, Russell Vought, Trump’s Office of Management and Budget director, wrote Powell a letter. He said Trump was extremely troubled by Powell’s management. Vought cited the renovation and said comparable federal building renovations cost many orders of magnitude less than the office Powell was building for himself on the taxpayer’s dime. He likened the office building renovation to a palace. The renovation project is now slated for completion in December 2027.