If I'm understanding Larry Summers correctly he's saying we ought to nationalize Fannie and Freddie:
In this scenario, the government would operate the GSEs as public corporations for several years. They would then be in a position to extend credit where appropriate to support resolution of the housing crisis. Once the crisis has passed, the federal government would divide their functions into government and private components, the latter of which would be sold off in multiple pieces. The proceeds could be used to fund the low-income housing support activity that was previously mandated to the GSEs.
I'm not going to pretend to have any real expertise in this field, but a surprisingly broad (surprising to me, at least) range of knowledgeable people has taken something like this position and it's the one that seemed intuitively correct to me in the first instance. I've yet to hear any convincing arguments to the contrary or, indeed, any real effort on the part of either the administration or the congress to so much as explain why these sterner measures aren't on the table.