Larry Summers Reportedly Backs Scott Bessent, Says Treasury Secretary Right To Question Fed’s Overreach

Larry Summers on Tuesday reportedly backed Treasury Secretary Scott Bessent on the topic of the Federal Reserve’s “overreach” in the non-monetary activities of the central bank.

In an interview with Bloomberg, the former Treasury Secretary stated that while the Federal Reserve needs to maintain its autonomy regarding monetary policies, the same stance does not apply to its non-monetary activities.

Speaking on this topic, Summers said, “Certainly, the judgments of political officials should influence those things.”

“There’s no basis for the Fed being entirely autonomous and separate in those areas,” he added.

More specifically, regarding public policy topics such as housing and education, Summers said concerns of the Fed “overreaching” in those aspects are “legitimate.”

Regarding Bessent's questioning of the Fed’s actions in this regard, Summers said the Treasury Secretary is correct. 

Meanwhile, U.S. equities declined in Tuesday morning trade as investors weighed the impact of the Trump administration reigniting tariff concerns by saying more letters could be sent out before the August 1 deadline.

The SPDR S&P 500 ETF (SPY), which mirrors the S&P 500 index, was down 0.18% at the time of writing, while the Invesco QQQ Trust (QQQ), which mirrors the Nasdaq, was down 0.57%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘neutral’ territory.

Summers’ comments come at a time when Bessent has called for a review of the Fed’s non-monetary activities, including the $2.5 billion building expansion project.

Earlier this month, Bessent said the formal process to replace Jerome Powell had begun, after hinting at hopes that the Federal Reserve Chair would leave the central bank altogether when his term expires in May 2026.

Last week, Powell called for a review into the Fed’s $2.5 billion building expansion project, after sharp criticism from President Trump and his administration.

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