“In June 2009, President Obama proposed to address failures of consumer protection by establishing a new financial agency to focus directly on consumers, rather than on bank safety and soundness or on monetary policy.” So explains the Consumer Finance Protection Bureau (CFPB), the new federal agency that emerged in the midst of a deep recession, widespread unemployment, and fathomless deficits. Now CFPB is in the news again in a Paul Krugman column that does a fine job explaining the government point of view.

Why do we need a new federal agency like CFPB? “Because fraud and abuse happen,” says Krugman who sees no abuse or fraud on the part of government, only evil bankers. And “the existing regulatory agencies are basically concerned with bolstering the banks.” So we needed a brand new federal agency for consumers, who are essentially helpless, whatever their educational background.

“Don’t say that educated and informed consumers can take care of themselves,” says Krugman. The least sophisticated borrowers are “probably duped into taking these products” but “even well-educated adults can have a hard time understanding the risks and payoffs associated with financial deals.” The CFPB has done “excellent work” on this front, and those who criticize it are “determined to make America safe for financial fraud.”

Quite a performance from the Nobel laureate. Those convinced that only a new government agency can protect them should consider the role of the Community Reinvestment Act in the financial crisis, and of course the federal bailout of financial institutions. Note also that President Obama, who promoted the CFPB, has selected to the head the U.S. Treasury Jack Lew, who got bonus of nearly one million dollars just before the federal government bailed out his employer Citigroup. The president’s pick to head the Securities & Exchange Commission is Mary-Jo White, who earned big money defending companies accused by the government of white-collar crime.

The CFPB won’t save the nation from financial misconduct but all is not lost. At this writing consumers are still free to hold views different from those of the president and his echo chamber.