Fed Inspector General Clears Powell of Wrongdoing While Citing Major Management Failures

Overview

• The Office of the Inspector General released a 120-page report Wednesday that found no grounds to refer the Fed renovation to the Justice Department or to impose administrative sanctions on Jerome Powell.
• The report says management and contracting failures materially contributed to roughly $1 billion in cost overruns, pushing the project’s estimate from about $1.3 billion to roughly $2.4 billion.
• Inspectors identified specific drivers of the overrun, including a failure to establish a guaranteed maximum price and liberal use of subcontracting that raised costs and stretched the schedule; HVAC and plumbing work alone cost about $346 million.
• Federal Reserve Chair Kevin Warsh pledged to follow the IG’s recommendations and hire an independent auditor to verify approved costs while Powell remains on the Fed board and has not publicly commented.
• The investigation’s legal path — D.C. subpoenas were voided in March, the DOJ closed its probe and referred the matter to the IG — has not ended political fallout, with President Trump renewing calls for Powell’s resignation and threatened prosecution.