Watchdog finds no criminality in Fed renovation that drew Trumps scrutiny

WASHINGTON — The Federal Reserve’s independent watchdog said Wednesday it found no reasonable grounds to believe there was a violation of federal law in a multibillion-dollar renovation project that drew criticism from President Donald Trump and short-lived scrutiny from federal prosecutors.But the central bank’s board “had not effectively executed” a contract and its cost-management provisions, according to a 120-page report from the Office of the Inspector General for the Board of Governors of the Federal Reserve System.Even after four years of construction and over $2 billion in awarded construction costs, the Fed board had “not established a guaranteed maximum price” for the project, and had set up “insufficient” internal project governance to manage a project of such “magnitude and complexity,” the watchdog said.Still, the report “did not identify administrative misconduct” nor any “reasonable grounds to believe that a violation of federal criminal law had occurred.”The closure of the investigation follows a more than yearlong review into the construction site on the central bank’s Washington, D.C., campus, which became a fixation of the Trump administration as the president also pressured Jerome Powell, who was the Fed chair until Kevin Warsh took over in May, to cut interest rates.Several components of the renovation’s design that drew scrutiny — the building’s marble, water features and a garden terrace — “did not materially contribute to subsequent cost increases,” the watchdog found.

The removal of four water features from the renovation plans would not result in significant cost savings, one official told the watchdog, because landscaping and other costs would be needed to replace the fountains.The watchdog said cost overruns resulted from “inflation, limited subcontractor bidding, substantial Board interior fit-out design changes, and challenging site conditions.”Moving from a design that focused on closed...