The New York Times tries to play catch-up on the proposal to put the Consumer Financial Protection Agency inside the Federal Reserve—an idea we said yesterday bordered on parody and which Barney Frank called a “bad joke“—and which the Times short-armed in yesterday’s paper.

And when you’re trying to play catch-up on a second-day story you sometimes have to stretch to find an angle—even if you’re the NYT, whose long-time philosophy is “it’s not news until we say so.” So perhaps that’s why the Times messes up here, with a lede that says the proposal “emerged on Tuesday as a potential breakthrough after months of partisan gridlock in the Senate over the terms of a broad overhaul of financial regulations,” a notion the paper proceeds to refute throughout the rest of the story, including the very next paragaraph:

But the plan, which would represent a fundamental shift in the role, if not the authority, of the central bank, still faced significant hurdles. Members of both parties, while not rejecting the idea outright, said they were leery, and consumer advocates said it would further empower an institution that had failed to keep mortgage and credit card companies in check and ensure fair terms for borrowers, even though it has had authority to do both.

What? But the headline said “Gridlock May Be Ending on Consumer Protection.” When your head does the whole Wimbledon-audience thing like that, you start to understand (just a little bit) why Matt Winkler instituted Bloomberg’s “but ban.”

Bloomberg itself is much better in its second-day effort, going with the angle that consumer advocates say putting the CFPA inside the Fed would be a near-total win by the banks.

“We have all sorts of individual agencies that protect Americans, and none of them is subservient to the regulator that is in charge of looking out for the industry,” said Lauren Saunders, managing attorney at the National Consumer Law Center in Washington. “This agency has to be independent so that it can fix the problems the banking regulators failed to fix.”

And Bloomberg directly contradicts the Times’s lede and headline:

Frank, who oversaw legislation passed by the House in December that would create an independent agency, said the chamber wouldn’t accept the proposed deal. Senators joined in the criticism yesterday.

Frank is, after all, the powerful chairman of the House Financial Services Committee. The Huffington Post quotes Elizabeth Warren, who came up with the whole idea of a CFPA, saying she’d rather have nothing at all than a paper tiger. I love this quote:

“My first choice is a strong consumer agency,” the Harvard Law professor and federal bailout watchdog said in an interview with the Huffington Post. “My second choice is no agency at all and plenty of blood and teeth left on the floor.”

This is good background from Bloomberg:

Some $600 billion in subprime mortgages were originated in 2006, up from $310 billion in 2003, according to Inside Mortgage Finance, a trade publication. The Federal Reserve began to hold hearings around the country in 2006, and consumer advocates provided details of abuse, transcripts from the meetings show.

“We were yelling at them in 2001 and 2002” to use their authority, says Michael Calhoun, president of the Center for Responsible Lending in Durham, North Carolina and the current chairman of the Fed Board’s Consumer Advisory Council. “It wasn’t like people didn’t know this stuff was going on.”

Edward Gramlich, a Fed Governor from 1997 to 2005, proposed that the Fed use its bank holding company authority to examine subprime lending subsidiaries. The proposal was opposed by then- Chairman Alan Greenspan, he said, and never went to the Board of Governors.

It’s pretty much the Peter Principle: The Fed has utterly failed—through intentional neglect, I might add—in its consumer-protection duties, so Dodd and Corker want to give it more consumer-protection duties. The Times has some quotes reporting this, but buries them.

It ought to make the Fed’s record perfectly clear. It might start by revisiting or just reprintingits own good report from two-plus years ago on that failure.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.