There's been some teeth-gnashing in the liberal blogosphere over Ryan Lizza's New Yorker profile of Larry Summers, the general thrust of which is that he supposedly went too easy on Summers, particularly on the issue of bank nationalization. Here's Dean Baker over at his American Prospect blog:

In terms of the bank bailout, some of us were worried that we were effectively taxing the whole country to support the rich bastards that put the economy in the toilet. Bank profits now stand at a record share of GDP and the bonuses at Goldman are as big as ever. What did the critics get wrong?

I didn't get into the nationalization debate in my earlier post about Ryan's piece, both because I think he got it right, and because I've pretty much said everything I have to say about nationalization already. But as this is apparently still very contentious, I'd just make a couple points in Ryan's (and Summers's) defense:

1.) Are the optics/politics of having taxpayers subsidize banks back to profitability pretty lousy? Yes, they're lousy. But much worse politics, I think, is a botched attempt to nationalize banks.

2.) Is having taxpayers subsidize banks back to profitability offensive from the standpoint of distributive justice? Yes, very offensive. But much worse from the standpoint of distributive justice is spending a couple trillion dollars to nationalize banks and failing to solve the problem--possibly making it much, much worse.

3.) Were there good reasons to believe that bank nationalization would fail? Yes, extremely good.* In fact, when Larry Summers grilled Tim Geithner on whether his plan was aggressive enough--and whether nationalization might be something worth considering--Geithner came back and laid out all the numerous ways that nationalization could be a fiasco. And Summers, who is not known for his credulousness in discussions of economic or financial policy, was persuaded.

You simply cannot talk to these guys and not appreciate how much some of them wanted to be more aggressive with the banks at various points--Geithner would say as much when he got agitated in internal discussions--but realized they couldn't in good conscience recommend that course to the president. And they were right. (For what it's worth, I say this as someone who initially supported nationalization.)

Ryan Lizza has some fascinating biographical details in his must-read profile of Summers in the forthcoming New Yorker. First, he solves a mystery I'd chewed over but never figured out when profiling Summers myself: 

M.I.T. hired him as a professor in 1979, then Harvard offered him tenure in 1982, when he was just twenty-seven. He was one of the youngest people to receive tenure in the university’s history. According to a friend of Summers’s, Harvard had wanted him earlier that year, but the university’s rules required him to have a Ph.D., and although he had finished his graduate work in 1979, he hadn’t yet turned in his doctorate, something that mystified his colleagues. “They had to get him to turn the thing in pronto, and have his committee pass him, so that they could move forward on the process,” the friend said. “This is a guy who published like a fiend, especially in those days. So why three years to get his Ph.D.? Well, his uncle Paul’s dissertation got Paul the Nobel Prize. And his uncle Kenneth’s dissertation got Kenneth the Nobel Prize. If you’re Larry, it’s pretty hard to turn in that dissertation.”

You rarely hear about the ways Summers's eminent family members loomed over him, even though it would have been impossible for them not to. This helpfully sheds some light on that, I think.

Also, Ryan has some great backstory on how Summers ended up in his current position:

TNR started off the week by trouncing The Atlantic at softball and settling in for a Sunday read of Ryan Lizza's New Yorker piece. But our peace of mind was soon disturbed.