4:36The Federal Reserve Board Building is visible as it undergoes renovations on June 10, 2025, in Washington, D.C. Pablo Martinez Monsivais/AP
The refurbishment of the Federal Reserve’s headquarters is facing renewed scrutiny following the initiation of a criminal investigation by federal prosecutors into Chairman Jerome Powell regarding his testimony before Congress about the undertaking.
In a statement released on Sunday, Powell asserted that the investigation is an extension of the Trump administration’s campaign to exert pressure on the independent entity to reduce interest rates. The Fed has not issued any further comments beyond Powell’s statement.
A spokesperson for Attorney General Pam Bondi remarked to ABC News, "The Attorney General has directed her U.S. Attorneys to prioritize investigating any misuse of taxpayer funds."
Details about the project
The White House has criticized Powell for mismanaging the prolonged renovation of the Fed’s headquarters. This renovation was initially approved in 2017 during President Donald Trump’s first term—before Powell was appointed as Fed chairman—and has faced criticism due to Trump’s dissatisfaction with Powell regarding interest rates.
Powell, a Republican, was renominated by Biden for a second four-year term, which is set to conclude this year.
According to the Fed, the headquarters and a nearby office building involved in the project have not undergone "comprehensive renovations" since the 1930s.
The buildings necessitate "a complete overhaul" of electrical, plumbing, fire suppression, and HVAC systems, along with "significant structural work" to comply with current codes, and the removal of "asbestos and lead contamination," as stated on the Fed’s website.
The Federal Reserve Board Building is visible as it undergoes renovations on June 10, 2025, in Washington, D.C. Pablo Martinez Monsivais/AP
Both buildings are recognized as historic sites on the National Mall, and the renovation aims to maintain as much of the original structure as possible, as indicated by Powell in a letter to the Senate Banking Committee obtained by ABC News.
What about the costs of the renovation project?
Last summer, the White House accused Powell of permitting the project’s expenses to escalate to $2.5 billion, which is several hundred million dollars higher than the initially estimated $2.1 billion. In his letter to the Senate, Powell explained that costs have risen over time for various reasons: "These factors include discrepancies over time between original estimates and actual costs for materials, equipment, and labor, as well as unforeseen conditions in the properties, such as higher-than-expected asbestos levels, soil contamination, and an elevated water table."
"Construction that involves the preservation of historic spaces necessitates specialized processes and methods, which are typically more intricate and incur higher costs compared to new construction or renovations of non-historically significant spaces not located on the National Mall," he stated.
In 2023, The Wall Street Journal reported that the project’s costs rose partly due to increasing prices for steel, cement, wood, and other materials.
Moreover, construction in Washington must comply with height restrictions to ensure buildings do not exceed the height of the Capitol. This can necessitate more underground construction, which tends to be more costly.
The renovation of the Capitol Visitors Center, aimed at modernizing and updating the three-level structure beneath the Capitol, ultimately cost over $600 million after being initially anticipated to cost $71 million.
Renovations to the Smithsonian Air and Space Museum on the Mall, which were initially projected to cost $250 million, are now expected to approach $1 billion, including $250 million in private funding, according to the Washington Post.
In 2016, former Smithsonian Secretary David Skorton informed Congress that it would be more expensive to demolish the museum and replace it, according to the Post.
Sourse: abcnews.go.com