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Fed Watchdog Clears Powell of Criminal Wrongdoing; Trump Renews Removal Push

The central bank's inspector general found no grounds for a criminal referral over the headquarters renovation, and the president repeated his demand that the former chair quit the board anyway.

Assembled by Claude from 9 sources at 9 outlets · Friday, October 2, 2026, Morning edition, 10:31 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 expensive headquarters renovation, in a report released on Wednesday axios.com. “At no point during our evaluation did we find reasonable grounds to believe that a violation of federal criminal law had occurred requiring a referral to the U.S. Attorney General,” the Office of Inspector General wrote axios.com.

The finding effectively clears Powell after the Justice Department opened an unprecedented criminal investigation into the then chair, which became public in January axios.com. A separate strand of that inquiry, into whether Powell had committed perjury during brief testimony about the renovation before a Senate committee, was dropped in April arkansasonline.com. The watchdog did find that the bank mismanaged the renovation, and reporting on the findings noted that the work was awarded without a guaranteed price arkansasonline.comthecentersquare.com.

Why it matters to investors

The report undercuts the case the White House had built against the former chairman thecentersquare.com. It did not end the dispute. President Donald Trump renewed his demand that Powell resign from the board despite the absence of criminal findings en.sedaily.com. “This is Jerome Powell's fault, and he should be forced to resign, IMMEDIATELY,” Trump wrote, adding that if Powell does not resign he should be sued politico.com.

The demand targets a sitting seat, not the chairmanship Powell has already left en.sedaily.com. Trump could seek to remove Powell along with governors Lisa Cook and Michael Barr, but court rulings and lengthy litigation could make that harder than it looks cnbc.comqz.com. The question for markets is not the renovation accounting. It is whether governors can be removed at political will, which is priced through long-term inflation expectations rather than through the front end cnbc.comen.sedaily.com.

What to watch

Precedent already cuts against the administration. In June the Supreme Court halted Trump's bid to oust Cook, holding that she was entitled to protection for now qz.com. One response to the watchdog report put it plainly: “The President should quit trying to fire Fed governors” kuwaittimes.com.

The succession fight is the second front. Republican Senator Thom Tillis says Fed independence is at stake and has vowed to block the nomination of Kevin Warsh as Powell's successor until the issue is addressed wncy.com. That leaves three separate processes running at once: a removal push the courts have so far blocked, a confirmation a member of the president's own party is holding up, and an inspector general report that criticised the renovation while clearing the man who oversaw it qz.comwncy.comarkansasonline.com.

Sources

  1. axios.com: Fed watchdog clears former chair Powell in renovation probe (2026-09-30)
  2. thecentersquare.com: Fed awarded $2B on renovation without a guaranteed price | National (2026-10-01)
  3. politico.com: Trump just can't say goodbye to Jay Powell - POLITICO (2026-10-02)
  4. kuwaittimes.com: Watchdog clears former Fed chief Powell in probe - Kuwait Times (2026-10-01)
  5. en.sedaily.com: Trump Renews Call for Powell to Quit Fed Board Despite No Criminal Findings (2026-10-02)
  6. arkansasonline.com: Fed watchdog says bank mismanaged renovation | The Arkansas Democrat-Gazette (2026-10-01)
  7. cnbc.com: Trump could target three Fed governors. Removing them may be harder than it looks (2026-10-01)
  8. qz.com: Trump targets three Fed governors for removal amid legal hurdles - Quartz (2026-10-02)
  9. wncy.com: The Fed's building renovations and Trump's push to oust Powell | Y100 WNCY (2026-09-30)