The Federal Reserve's internal watchdog has cleared former Chair Jerome Powell and other officials of any criminal wrongdoing in connection with the central bank's costly renovation project, according to a report released Wednesday.
Inspector General Michael Horowitz's office concluded that while the Fed “has not effectively executed” its construction management risk contract for the overhaul of two buildings in Washington, the issues identified did not rise to the level of criminality.
The 121-page report detailed “numerous deficiencies” in the project's oversight but stated, “At no point during our evaluation did we find reasonable grounds to believe that a violation of federal criminal law had occurred.”
Horowitz launched the inquiry in April at the urging of U.S. Attorney for the District of Columbia Jeanine Pirro, whose office had conducted its own three-month investigation into Powell's role. Powell has consistently denied any misconduct, characterizing the probe as an attempt to pressure the Fed into cutting interest rates, a move repeatedly demanded by President Trump.
The report's release comes amid broader scrutiny of federal officials and their handling of public funds, with some lawmakers calling for more aggressive oversight of executive branch actions. The renovation project, initially estimated at millions of dollars, has faced delays and cost overruns, drawing criticism from Capitol Hill.
While the watchdog found no criminal intent, it did not shy away from criticizing the Fed's management practices. The report highlighted failures in contract oversight and risk assessment, recommending improvements to prevent similar issues in future projects. The Fed has said it will review the recommendations and implement changes where necessary.
Powell, who served as Fed chair until his term ended, has not commented directly on the report's findings. However, his earlier statements suggest he views the investigation as politically motivated, a position echoed by some Republican allies who see the probe as part of a broader pattern of politically driven investigations.
The development also comes as the Fed faces renewed pressure from the Trump administration to lower interest rates, a topic that has been a point of contention between the White House and the central bank. The report's conclusion may provide some relief to Powell and his team, but it is unlikely to end the political debate over the Fed's independence.
As the story continues to develop, analysts are watching whether the report will influence the ongoing confirmation process for new Fed leadership or affect the central bank's policy decisions in the coming months. The renovation project, meanwhile, remains a work in progress, with the Fed expected to complete the upgrades in the coming years.
