This recent commentary on Pete Enns’ blog, I think, hits the nail on the head:
I have said this on other occasions and it bears repeating: the tensions in conservative American Christianity that began in earnest in the 19th century were not so much “caused” by higher-critical scholarship, but by the clash of some very legitimate newer insights into the Bible (e.g., pentateuchal authorship, the ANE background to Genesis, etc., etc., etc.) with older theological paradigms that were not suited to address these newer insights. I understand that the matter is a bit more complicated than I lay out here, but the general contours are clear to me. The resulting liberal/fundamentalist divide was perhaps an inevitable perfect storm, but neither option does justice to the rich possibilities before us.
If I may continue a rather reductionistic analysis (which is not accurate on the level of historical analysis, but is alive and well, nonetheless—indeed, perpetuated—in some popular circles): liberals looked at our developing knowledge of the ancient world of the Bible and said “A ha, I told you. The Bible is nothing special. Israelite religion is just like any other ancient faith. You conservatives need to get over yourselves.” The fundamentalist response was (fingers firmly planted in ears) “La la la la la la, I do not hear you. There may be a millimeter of insight in some of what you are saying, but if what you are saying is true, our theology—which is the sure truth of Scripture, handed down through the ages—is false, and that is unthinkable.”
Battle lines were drawn rather than theological and hermeneutical principles reassessed.
“Neither option does justice to the rich possibilities before us.” Exactly.