javac generates unverifiable initializer for nested subclass of local class

This code compiles correctly but generates a: Bad type on operand stack exception at run time:

public class Test {
    public static void main(final String args[]) {
        class NamedLocal {
            Object m() {
                return args;
            }
            class NamedLocalSub extends NamedLocal {}
        }
        new NamedLocal().new NamedLocalSub();
    }
}

after:

$ javac Test.java
$ java Test

Exception in thread "main" java.lang.VerifyError: Bad type on operand stack
Exception Details:
  Location:
    Test$1NamedLocal$NamedLocalSub.<init>(LTest$1NamedLocal;)V @7: getfield
  Reason:
    Type uninitializedThis (current frame, stack[1]) is not assignable to 'Test$1NamedLocal$NamedLocalSub'
  Current Frame:
    bci: @7
    flags: { flagThisUninit }
    locals: { uninitializedThis, 'Test$1NamedLocal' }
    stack: { uninitializedThis, uninitializedThis }
  Bytecode:
    0000000: 2a2b b500 012a 2ab4 0002 b700 03b1

at Test.main(Test.java:10)

Original issue reported by jeremymanson@google.com