It isn't about being smart. It's about having resources. Critical Scripture scholarship was formally endorsed by Pius XII in the 1943 encyclical, Divino afflante Spiritu, written in response to the advances in Biblical archaeology and other disciplines then taking place. Today, no serious  theologian -- Catholic, Orthodox, Protestant or Jewish -- rejects the critical approach. None.

But there are opponents, of course. The most vocal are Protestant fundamentalists, so your characterization of the literal approach as 'Catholic' and the critical as 'Protestant' is particularly ironic. In fact, there is no Catholic/Protestant dichotomy, only one between scholarly and  uninformed interpretations.

By the way, it isn't a progressive/conservative issue either. You won't find a legitimate Catholic seminary anywhere, traditional or progressive, that teaches Scriptural literalism. The exception, I suppose, might be one of those sedevacantist sems set up in somebody's basement.