Trump renews calls for former Federal Reserve chief Jerome Powell's resignation
The Federal Reserve's watchdog on Wednesday found no grounds for a criminal referral over a roughly $1 billion cost overrun on renovations to the central bank's Washington buildings, while faulting project oversight. The findings prompted President Donald Trump to renew his call for former Fed chief Jerome Powell to resign.
Trump had for years chafed at Powell's leadership of the Fed, publicly and incessantly berating him for not lowering interest rates. The spiralling cost of the Fed renovation project arose early in the president's second term as a fresh focal point for the White House's attacks on Powell.
Key members of the Trump administration and their allies in Congress suggested wasteful spending on luxury upgrades had ballooned the project's budget to hundreds of millions of dollars more than earlier estimated.
Powell countered that the extra costs reflected unexpected challenges, such as asbestos abatement and higher-than-estimated prices for materials and labour as the construction went deep underground.
He also asked the Fed's IG to take a fresh look at the project and its costs. The report on Wednesday said design elements like marble, water features and a garden terrace cited by critics in the White House "did not materially contribute" to the cost overruns.
The 120-page document did, however, outline extensive management shortfalls, including a failure by the Fed to follow through on what it intended to be a "guaranteed maximum price" contract that would make the contractor responsible for cost overruns. The maximum price, in effect, was never actually established, with Fed project managers awarding subcontracts that continued to escalate the price and timeline of the project.
The central bank, for example, ultimately paid $346 million for plumbing and air conditioning on the project, triple the initial estimate.
As controversy over the renovations escalated, Trump, accompanied by Scott, visited the renovation site in July 2025 to press his criticisms. The visit led to a memorable on-camera incident in which Powell appeared to fact-check the president's stated cost-overrun number.
Tensions rose sharply in January 2026, when US Attorney for the District of Columbia Jeanine Pirro issued subpoenas to the Fed Board seeking information about the cost overruns and Powell's testimony to Congress about them.
Powell disclosed the Department of Justice's threat to criminally indict him in an unusual Sunday night video statement, calling it an attempt to intimidate an institution that sets interest rates based on what is best for the country rather than according to the president's preferences.
The revelation of the DOJ probe prompted an outcry against political interference in the central bank, not only from Powell's global peers and economists but also, closer to home, from lawmakers, including some of Trump's fellow Republicans.
A federal judge quashed the DOJ's subpoenas in March, agreeing with Powell that they were a pretext for pressuring the Fed chief into lowering rates, as Trump wished, or resigning. Pirro's subsequent decision to close her investigation and refer the matter to the Fed IG convinced Republican Senator Thom Tillis to allow Trump's nomination of Warsh as Powell's successor to proceed.
Powell, however, has stayed on at the Fed as a governor.
"I have said that I will not leave the Board until this investigation is well and truly over, with transparency and finality, and I stand by that," Powell said at his final press conference as Fed chief in April.
Pirro's office said on Wednesday that it had received the report and was reviewing it.
