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Fed watchdog clears Powell over headquarters renovation as Trump demands he resign

The Federal Reserve's inspector general found no criminal wrongdoing by former chair Jerome Powell in the central bank's headquarters project, and the president responded by calling for his resignation and asking the Justice Department to study the report.

Assembled by Claude from 10 sources at 10 outlets · Thursday, October 1, 2026, Morning edition, 10:28 AM EDT · no human byline

Disclosure. This item was assembled by an AI from the RSS excerpts of the outlets tagged inline. No human wrote or checked it before publication. Feed selection and categories are editorial choices by Teresa Lo. Nothing here is investment advice.

What happened

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 Wednesday axios.compbs.org. The Office of Inspector General wrote that at no point during its evaluation did it find reasonable grounds to believe that a violation of federal criminal law had occurred requiring a referral to the US Attorney General axios.comstraitstimes.com.

The findings effectively clear Powell after the Justice Department opened a criminal investigation into the then-Fed chair, which became public in January axios.com. The report was not a clean bill of health for the project itself: Reuters reported that the watchdog found problems but no misconduct, and the Washington Post reported that the Fed mishandled the renovations reuters.comwashingtonpost.com. Sources differ on the project's size, with the Financial Times citing a $2.5bn renovation and ABC News citing a $2.4 billion building ft.comabcnews.com.

Why it matters to investors

The response was immediate. President Trump said Powell should resign after the watchdog cleared him, posting that this is Powell's fault and that he should be forced to resign immediately, adding that if he does not resign he should be sued at the highest level ft.comthehill.comwashingtonpost.com. Trump also said he had asked Blanche to study the inspector general's report thehill.com.

Powell left the chairmanship but remains on the Board of Governors, which is what makes the demand consequential rather than symbolic thehill.comft.com. France 24 noted that the campaign against the Fed's independence has also seen the president attempt to unseat another governor, Lisa Cook, over mortgage fraud allegations france24.com. The Straits Times reported the same effort to remove Cook over alleged wrongdoing in an unrelated matter straitstimes.com.

What to watch

The project's governance is being handed elsewhere. Current Fed chair Kevin Warsh, who took office in May, concurred with the findings and proposed the remedy in his response to the inspector general's report abcnews.comwsj.com.

Two threads run from here. One is whether the Justice Department acts on the report it has been asked to study, after an inspector general explicitly found no grounds for a criminal referral thehill.comaxios.com. The other is the Cook case, which tests directly whether a sitting governor can be removed france24.comstraitstimes.com. For bondholders the renovation is a side issue; the removal question is not, because the market prices the Fed's reaction function on the assumption that governors serve fixed terms france24.com.

Sources

  1. pbs.org: News Wrap: Watchdog finds no criminal activity by Powell related to Fed renovation - PBS (2026-10-01)
  2. reuters.com: Watchdog finds problems but no Fed misconduct in Powell-era renovation project - Reuters (2026-09-30)
  3. ft.com: Trump says Powell should resign after Fed watchdog clears ex-chair of misconduct (2026-09-30)
  4. thehill.com: Trump says he asked Blanche to 'study' Fed watchdog report that cleared Powell - The Hill (2026-09-30)
  5. washingtonpost.com: Watchdog finds Fed mishandled renovations that Trump tried to oust Powell over (2026-09-30)
  6. france24.com: Watchdog finds no criminal misconduct over US Fed renovations despite Trump probe (2026-09-30)
  7. abcnews.com: Fed watchdog finds no crimes in $2.4B building renovation, only mismanagement (2026-09-30)
  8. wsj.com: The End of the Fed Building Fiasco - WSJ (2026-09-30)
  9. axios.com: Fed watchdog clears former chair Powell in renovation probe (2026-09-30)
  10. straitstimes.com: Watchdog finds no Fed misconduct in renovation; Trump calls for Powell's resignation (2026-10-01)