Fed HQ Renovation Lands Jerome Powell Under Investigation

Federal prosecutors opened a criminal investigation into whether Federal Reserve Chair Jerome Powell misled Congress about the scope and cost of a sweeping renovation of the central bank’s Washington headquarters, turning a long-simmering political feud into a high-stakes real estate controversy.

The probe, reported by the New York Times, centers on a roughly $2.5 billion overhaul of the Fed’s historic campus along Constitution Avenue, including the Marriner S. Eccles Building and an adjacent structure dating back to the 1930s. Prosecutors are reviewing Powell’s public statements and internal spending records to determine whether he downplayed the scale of the work and its ballooning price tag when testifying before lawmakers.

The project, which broke ground in 2022 and is scheduled to wrap in 2027, is estimated to be about $700 million over budget. The Fed has blamed the ballooning price tag on rising labor and material costs, extensive asbestos and lead remediation, soil contamination and the challenge of retrofitting nearly century-old buildings to meet modern accessibility and security standards.

Still, the renovation has drawn scrutiny well beyond the usual grumbling over capital-intensive projects.

Early planning documents from 2021 described features like private dining rooms for senior officials, upgraded elevators, marble finishes and a rooftop terrace. Under oath at a June congressional hearing, Powell said many of those elements were scrapped or mischaracterized, insisting there were no “V.I.P.” perks and that original marble was largely being restored, not replaced.

That testimony is at the heart of the investigation, approved late last year by Jeanine Pirro, the Trump-aligned U.S. attorney in Washington. The Justice Department issued grand jury subpoenas seeking detailed records tied to the renovation, according to officials familiar with the matter.

Large-scale rehabs of landmark buildings are notorious for cost creep, particularly when hazardous materials and preservation requirements come into play.

But what might pass as a painful but routine overrun in the private sector has become a flashpoint because the Fed’s balance sheet — and its independence — are on the line.

Trump, who has repeatedly clashed with Powell over interest rates, seized on the renovation as evidence of mismanagement, deriding the Fed chair as “not very good at building buildings.” Powell, for his part, has called the investigation “unprecedented” and warned it threatens the Fed’s autonomy.

— Holden Walter-Warner