Fed Watchdog Finds $1B HQ Overrun But No Criminal Grounds, Reports Management Failures

The Federal Reserve's inspector general said on September 30, 2026, that its Washington headquarters renovation now costs about $2.4 billion — roughly $1 billion over the original budget — but found no federal criminal violation warranting referral to the Justice Department and no administrative misconduct. The report covers renovations of the Eccles building and an adjacent 1931 federal building, initially budgeted at about $1.3 billion in 2020. It cites the Fed's failure to enforce a guaranteed maximum price contract that would have capped contractor liability, missing competitive bidding, and inadequate governance. Plumbing and HVAC costs reached $346 million, about triple initial estimates. Design changes, site conditions and inflation also contributed. Fed Chair Kevin Warsh, who succeeded Jerome Powell in May 2026, said the Fed will adopt the recommendations, cede project management to the General Services Administration, and hire an independent auditor to verify awarded contracts' costs and compliance. The probe followed White House and Republican criticism of Powell over the overrun. Powell remains a Fed governor through January 2028, and declined to comment. His departure remains uncertain.