In 2003, Notre Dame imprisoned its teachers of economic history, "saltwater economics," and economic theory compatible with Catholicism in a department of economics and policy studies. A new department of economics and econometrics was organized and staffed to do orthodox, mathematically sophisticated, "freshwater" economics. As the culmination of several moves crippling to the heterodox department, it is reported that Notre Dame will dissolve it and scatter the professors into other departments. They are no longer allowed to teach introductory or intermediate level courses. The orthodox types have consolidated their power just at the moment of the most spectacular failure of their theories in the real world. Apparently, the Catholic Church learned nothing from that Galileo affair.
Commenter SS on Mark Thoma's blog highlights here the inconsistency between the Notre Dame choice and papal encyclicals.
Notre Dame economics students have a blog, and this is what one posted about the crisis in economics and the missed opportunity at Notre Dame. The post is mostly excerpts from Jamie Galbraith's paper for the NEA Higher Education Journal.