Fed watchdog clears Powell over renovation; Trump demands he resign

A Federal Reserve watchdog found no criminal wrongdoing by former chair Jerome Powell in its investigation of the central bank’s headquarters renovation, in a report released on Wednesday⁵. The Office of Inspector General wrote that at no point in its evaluation did it find reasonable grounds to believe a violation of federal criminal law had occurred requiring a referral to the US Attorney General⁵, language Reuters also quoted from the report⁹.

The report found deficiencies in the project without finding misconduct⁹, and cleared Powell after the Justice Department opened an unprecedented criminal investigation into the then-Fed chair, which became public in January⁵. Powell remains on the Fed’s Board of Governors¹.

Accounts of the project’s cost differ. USA Today put the renovation at 2.5 billion dollars¹, while the Guardian described Trump criticising a 2.4 billion dollar rehabilitation² and CNN reported the Fed now budgeting roughly 2.4 billion dollars for the work³.

Why it matters to investors

The renovation was the vehicle for pressure on monetary policy. Trump criticised the project amid attempts to push then-chair Powell into lowering interest rates².

That pressure did not stop with the report. Hours after it was released, Trump called for Powell to resign from his post or face legal action⁷, saying he should step down from the central bank’s board over the renovation⁸. Trump is also trying to sack Fed Governor Lisa Cook over alleged wrongdoing in an unrelated matter⁹.

One structural detail limits how independent the finding looks: the Fed’s inspector general is chosen by the Fed chair⁴. Kevin Warsh was confirmed as Fed chairman in May⁴, took over the top post that month³, and concurred with the review’s conclusions³.

What to watch

Management of the building is changing hands. In a letter accompanying the report, Warsh said the General Services Administration will take over management of the project⁶.

The open question is whether the campaign to remove Fed officials continues without a legal basis. The watchdog found no evidence of misconduct by the Fed in the renovation⁶, yet the president’s demand for a resignation followed within hours^7,8, and a separate effort against Governor Cook is still live⁹. For investors, the variable is the credibility of Fed independence rather than the building itself, at a moment when the committee is debating the timing of its next rate move^2,5.