OPINION:
It never should have been necessary for the Justice Department to issue subpoenas to the Federal Reserve regarding cost overruns tied to the central bank’s office renovations.
In July, Federal Reserve Chair Jerome Powell asked the Fed’s watchdog to investigate this matter. As the Justice Department’s partner in investigating and prosecuting fraud, the Federal Reserve’s inspector general should have been the natural bridge for providing the agency with information relevant to its investigations.
Instead, the Justice Department had to use its subpoena power against another arm of the federal government, an action so extraordinary it signals that internal cooperation has broken down.
Washington still likes to imagine the federal government as one seamless information network, possessing a single repository where every agency’s data flows effortlessly to whoever needs it. The reality is far messier.
Federal agencies are siloed enterprises, each with its own systems, turf and bureaucratic reflexes for self-preservation. That’s why, when the Justice Department investigates allegations of fraud inside an agency, it relies heavily on that agency’s inspector general.
Congress designed the inspector general system precisely for situations like this. Inspectors general have broad statutory authority to access agency records and conduct audits and investigations. Further, in the case of the Federal Reserve inspector general’s office, the attorney general gave it law-enforcement powers, including armed special agents who can conduct criminal investigations.
The Federal Reserve inspector general’s office has roughly 150 oversight professionals, including special agents and auditors. Their work routinely leads to criminal prosecutions and hundreds of millions of dollars in recoveries. This includes the Justice Department prosecution of Fed employees, such as the senior manager who illegally used confidential Federal Reserve information to make hundreds of thousands of dollars from insider trading.
All this raises an uncomfortable question: If the Federal Reserve inspector general’s office was already conducting an investigation into cost overruns, then why did the Justice Department need a subpoena?
The Justice Department’s own policy discourages subpoenas to federal agencies. Subpoenas are to be used only after efforts at agency cooperation have collapsed, and then only with high-level approval. Assuming the Justice Department followed its own rules (and there is every reason to believe it did), it seems that the Fed’s watchdog refused to cooperate in a criminal investigation.
It’s not as if Michael Horowitz, the current Federal Reserve inspector general and former Justice Department inspector general, shrinks from politically sensitive cases. Despite long-standing policy against confirming the existence of a criminal investigation, he was willing to publicly announce his office’s investigation into alleged attempts to overturn the 2020 election.
Mr. Horowitz was then willing to send roughly a dozen armed special agents to conduct an early morning raid on former Justice Department lawyer Jeffrey Clark’s home. If he was willing to take on the most politically charged cases in Washington, then politics cannot explain this present hesitation.
The inspector general system is supposed to make the Justice Department’s job easier, not harder. During my time as a federal prosecutor, cooperation with inspectors general was the difference between a yearslong investigation and a timely resolution. As an inspector general at two Cabinet agencies, I made sure my offices were partners with law enforcement, not gatekeepers of information.
The attorney general vested the Federal Reserve inspector general’s office with law enforcement authority. If the Federal Reserve office isn’t cooperating with the Justice Department in a criminal investigation, then the attorney general should seriously reconsider the necessity of that authority.
Authority in Washington is only as meaningful as the accountability that comes with it.
• Sean O’Donnell is a senior attorney at Judicial Watch Inc. From 2020 to 2025, he was inspector general at the U.S. Environmental Protection Agency, from where he was a lone voice in the EPA warning against “fast money” and careless spending. His reputation as a relentless fighter against fraud, waste and abuse was earned, as he took the agency’s Office of Inspector General from one that realized only $3 million in annual monetary impact to one realizing more than $2 billion in 2024.
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