Inspector general investigation discredits Trump’s claims about Federal Reserve renovations

The inspector general’s office at the Federal Reserve conducted a lengthy investigation into the building’s renovation project, but the internal watchdog concluded that there was no evidence the project crossed any legal lines — an outcome in direct odds with President Donald Trump’s repeated claims.

In a 121-page report, released to the public on Wednesday, the Fed’s inspector general conceded that the Fed board had not “effectively managed and executed its ‘construction manager at risk’ contract and repeatedly deviated from its cost-management provisions,” which led the watchdog office to present seven recommendations to address underlying concerns.

The findings nevertheless concluded that investigators “did not identify administrative misconduct” or any “reasonable grounds to believe that a violation of federal criminal law had occurred,” according to the report.

This is not the outcome the White House was hoping to see. Indeed, in January, the Justice Department launched a highly controversial criminal investigation into then-Fed Chair Jerome Powell, specifically focused on the central bank’s renovation project.

Around the time the news began to reach the public, Powell issued a roughly 2-minute video statement, speaking directly to the camera, confirming that Trump’s DOJ had served the Federal Reserve with grand jury subpoenas, threatening a criminal indictment.

Powell also explained what appeared to be the obvious motivation behind the developments: “The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president. This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions, or whether instead monetary policy will be directed by political pressure or intimidation.”

The provocative gambit — no president had ever before tried to intimidate a sitting Fed chair with a dubious criminal probe — led to a political backlash that proved swift, broad and bipartisan, with several congressional Republicans agreeing that it was a mistake to pursue the Fed chair with trumped-up charges.

It was also a legal fiasco. In March a federal judge quashed the DOJ’s subpoenas targeting Powell, emphasizing the fact that prosecutors “produced essentially zero evidence.”

The Justice Department closed its investigation soon after, roughly a year after the president made an in-person appearance at the construction site, where he stood alongside Powell and made claims that were also proved untrue.

As for the process moving forward, incumbent Fed Chair Kevin Warsh wrote a letter to Inspector General Michael Horowitz, agreeing about the need to complete the ongoing project “in the most efficient and transparent way possible,” and adding that the General Services Administration would be the project executive, effective immediately.

For his part, Trump issued a 422-word statement on this to his social media platform, which went in a variety of directions before concluding that he wants to see Powell “sued, at the highest level, by the United States Government, for either corruption or incompetence.”

To date, no one in the administration has produced any evidence of the former Fed chair being corrupt or incompetent.

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