In a report released on Wednesday, the Federal Reserve's Comptroller General stated that management and oversight failures led to significant overruns in the renovation project of the central bank's headquarters, but no evidence sufficient to justify criminal prosecution was found.

The report states: 'During our evaluation process, at no time did we find any reasonable grounds to believe that there were acts in violation of federal criminal law that would require referral to the U.S. Attorney General in accordance with the Ombudsman Act.'

The conclusions of this independent oversight agency may weaken one of the lines of attack against former Federal Reserve Chairman Jerome Powell. U.S. President Donald Trump and other critics have accused Powell of poor management of the project and of misleading Congress during his testimony before Congress.

The inspector general's report made almost no concessions to Powell's critics, acknowledging only his responsibility as the head of the agency for project management. The report detailed how the renovation project at this facility in Washington saw costs increase by about $1 billion due to design changes and other issues.

Some critics allege that Powell committed perjury when testifying before the Senate regarding this project in June 2025. The Office of the Inspector General did not specifically evaluate this allegation, but the report states that supervisory agencies reviewed materials related to Powell's testimony. The report does not make any allegations of misconduct related to that testimony.

The report indicates that the Federal Reserve Board did not participate in the daily decision-making of this project.

The report states: "In fact, we expect [the Council] to delegate the day-to-day management of large construction projects."

Trump has blamed the recent interest rate hike on what he called the Federal Reserve's "hostile" board of governors, despite the decision being supported by Kevin Warsh, the newly appointed chairman of the Federal Reserve by Trump. Federal Reserve officials and others in the central banking community have been eagerly awaiting the results of this review, which began in July 2025, as they know it could provide an opportunity for Trump to attack Powell again.

Last year, Trump fiercely criticized Powell on this matter, and in the months that followed, there were speculations that the president might use this as a reason to fire Powell. In July 2025, the two inspected a construction site together, and the tense atmosphere was recorded on video. After a judge stopped the federal criminal investigation, Powell completed his term as chairman on schedule.

Trump has long advocated that the Federal Reserve should lower interest rates, and he has stated that he will use this as a criterion for selecting the Fed chairman. In January of this year, Powell stated in a rare video statement that criminal investigations related to renovations were merely an excuse to force him to lower interest rates.

The Department of Justice may reinstate the investigation into Powell based on these new findings, or Walsh might also request his resignation. Powell remains a member of the Federal Reserve Board, with his term ending in January 2028.

The Federal Reserve Board declined to comment on this report. The report also includes a letter from Walsh, who welcomed the investigation results and stated that the Federal Reserve would take measures to implement the recommendations of the report.

This investigation was led by Michael Horowitz, the Comptroller of the Federal Reserve. He was appointed by Jerome Powell in June 2025, and a month later, Powell requested that the investigation be conducted.

Trump and his Republican allies alleged that Powell mismanaged this costly renovation during his testimony before the Senate in June and misled Congress.

The Federal Reserve has allocated $2.5 billion in its 2025 budget for the renovation of the Eakles Building, which is a historic structure that houses the Federal Reserve's headquarters. This amount is about $700 million higher than previous estimates. The Fed attributes the increased costs to design updates made after consultations with other federal agencies, discrepancies between estimated material and labor costs and actual costs, as well as unexpectedly harsh working conditions at the construction site.

Congress has designed the Federal Reserve to be an institution independent of other parts of the executive branch. The institution raises its own funds and manages its own budget.

Republican senators who attended Powell's testimony last year stated that they did not believe Powell committed any crimes in his testimony.

“It was I who asked the question,” said Tim Scott, a Republican senator from South Carolina, in an interview with Fox Business Channel in February. Scott stated that he believes Powell is not competent enough, but “I don’t think he committed any crimes during the hearing.”

Nevertheless, the president still insists that there are "criminal acts" involved in the renovation issue.

In December last year, Federal Prosecutor Jenny Pirro of the District of Columbia launched a criminal investigation against Powell and the Federal Reserve regarding renovation issues. In March, James E. Boasberg, the Chief Judge of the United States Court of Appeals for the District of Columbia Circuit, revoked the subpoenas issued by Pirro to the Federal Reserve. The judge determined that there was evidence indicating that these subpoenas were intended to "harass and pressure Powell" regarding interest rate matters, but there was no evidence showing any improper conduct on Powell's part.

Piro agreed to withdraw the investigation in April in order to clear the way for the confirmation of Walsh's nomination.

But at that time, Piro stated that she was awaiting the report from the inspector general and would consider restarting the case.

Piro said, 'If it turns out to be necessary, I will not hesitate to reinstate the criminal investigation.'

Piro and the White House did not immediately respond to requests for comments on this report by the Inspector General.

Before being selected for this position, Walsh described cost overruns as "outrageous" in an interview with Fox. At a press conference after his appointment was confirmed in June, Walsh stated that he looked forward to reading the report and said his focus would be on "how to be more accountable for the taxpayers' money."

In a letter attached to the report, Walsh stated that he plans to conduct a comprehensive audit of the renovation project and has requested that the General Services Administration, which is responsible for other federal government construction projects, serve as the executor of this project in the future.