The More Things Change.

• Author: Summers, Larry

In the great 2021 debt/Fed debate, the more things change, the more they stay the same.

Despite an unusual personal and social style, [Larry] Summers was the least partisan, most intellectually daring, and most courageous financial official I've met in more than thirty years in Washington. A diamond in the rough, only Summers, a democratically appointed Treasury secretary, took on the questionable financial leveraging practices of one of the Democratic Party's biggest sources of fundraising cash, Fannie Mae.

For decades, the politically untouchable Fannie Mae enjoyed an implicit assumption in the markets that the U.S. Treasury guaranteed its huge portfolio of low-income mortgage loans. This allowed the firm to borrow at much lower interest rates than its competition, but created a dangerous market distortion by encouraging excessive borrowing. For...