The Albany Gazette - Watchdog clears former US Fed chief Powell in renovation probe

"At no point during our evaluation did we find reasonable grounds to believe that a violation of federal criminal law had occurred," the Office of the Inspector General (OIG) of the Federal Reserve said in its report.

In April, the Department of Justice dropped a criminal probe into the then-chairman over the cost overruns after Trump repeatedly criticized and insulted Powell over interest rate policy.

In his second term, Trump had launched an unprecedented assault on the Fed's independence as he demanded the central bank cut rates to spur economic activity.

The charges were dropped after a senator from Trump's own party refused to confirm the president's chosen successor to Powell, saying he would only do so if the criminal probe was stopped.

At the time, US Attorney Jeanine Pirro said she would bow to the inspector general's findings.

But on Wednesday, Trump demanded Powell be "forced to resign" from the Fed's board over the issue and said he was directing his Attorney General to "study the report."

"If he doesn't resign, he should be sued, at the highest level," said Trump.

- Unprecedented assault -

Powell took the helm of the Fed during Trump's first presidency in 2018 and was subsequently reappointed to the position under Democratic president Joe Biden.

When he announced that the DOJ probe had been launched in January, Powell explicitly said it was meant to pressure the Fed to set interest rates in line with Trump's preferences.

In a highly unusual move, he did not resign his post on the Fed's Board of Governors when his term as chair ended in May.

At the time, Powell said he would not leave that position until the probe over the cost overruns was "well and truly over, with transparency and finality."

Trump's campaign against the Fed's independence has also seen him attempt to unseat another Fed governor, Lisa Cook, over mortgage fraud allegations that she denies.

In June, the Supreme Court sided with Cook and ruled that Trump could not summarily dismiss her over unproven allegations.

In August, however, the White House doubled down on its attempt to fire Cook.

On Wednesday, Democratic Senator Elizabeth Warren said the OIG's report proved that Trump's DOJ has "no basis to restart the President's witch hunt against former Fed Chair Jerome Powell."

"The President should quit trying to fire Fed governors to cover up for his economic failures and instead stop his chaotic tariffs and end his war in Iran."

- Management deficiencies -

The OIG's investigation centered around a major building renovation project at the Fed's Washington headquarters whose cost estimates grew from $1.3 billion in February 2020 to $2.4 billion in December 2024.

In its report -- which was dated Tuesday but made available online on Wednesday -- the OIG said that its probe found deficiencies in management of the renovation project, but "did not identify administrative misconduct during our evaluation."

It made a series of recommendations to address those problems, including the appointment of an independent body to oversee costs and the construction schedule, and the ordering of an audit of the project.

In a letter attached to the report, Fed Chair Kevin Warsh pledged to implement the OIG's recommendations.

"With the changes we are putting in place, we will deliver a superior result for this project and add to our strengths as an institution," he wrote.

(T.Wright--TAG)