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Obama's administration is still squeamish about outright nationalization of banks. According to Geithner and Summers, this is because government isn't an efficient bank manager.

But even if government isn't good at managing a single bank, it might still be good at managing a bunch of banks at the same time. This is because the objectives of the two types of activities is fundamentally different - a single bank maximizes its profit, while the banking system as a whole is supposed to support economic activity. The rationale for nationalization is not that government would make banks more profitable, but that it would allow the banks to act in a coordinated fashion such that the entire economy benefits. In economics, we call this "solving a coordination problem."

Geithner and Summers don't appear to realize this yet - or, if they realize it, they have some counterargument that they haven't told us. More likely, they're simply infected with a disease that is all too common among American economists - an irrational reverence for businessmen as a class, masquerading as faith in "market mechanisms."