Elizabeth Warren on the Credit Card Industry

DATE March 27, 2007 ACCOUNT NUMBER N/A
TIME 12:00 Noon-1:00 PM AUDIENCE N/A
NETWORK NPR
PROGRAM Fresh Air

Interview: Harvard law professor Elizabeth Warren discusses the
credit card industry
TERRY GROSS, host:

This is FRESH AIR. I'm Terry Gross.

Yesterday I got another mailing from my credit card company alerting me to
some changes in policy. As usual, I just threw it out. The print was really
small, and I figured even if I read it, I wouldn't understand it. But my
guest can explain a lot of the credit card agreement fine print that we don't
bother to read that details why our interest rates rise and why we get slapped
with fees. Elizabeth Warren has written and testified to Congress about
unfair and deceptive credit card practices. She's a professor of law at
Harvard University and specializes in credit card law and bankruptcy law. Her
books include "The Two-Income Trap: Why Middle-Class Mothers and Fathers Are
Going Broke."

Elizabeth Warren, welcome to FRESH AIR.

We all get junk mail nearly every day offering us credit cards at low interest
rates, but there's a catch or two with these low interest rates. Tell us
about the catch.

Ms. ELIZABETH WARREN: Well, the basic model for pricing credit cards today
is two tiers. They want to put a credit card in the hands of every man,
woman, child who might use it because the credit card companies make a small
profit every single time you use that card. It's called the merchant discount
fee, and so, you know, a couple of pennies on every dollar spent on a credit
card adds up to about $21 billion for the credit card companies. So it turns
out to be a pretty nice chunk of change. But the real way they make their
money, the sweet spot in the profit, is that they know when they hand out all
those credit cards some people are going to get into trouble with them. Some
people are going to slip and stumble, some will lose their jobs, some will get
sick, some will just be irresponsible. But they'll move into a territory
where they end up paying over-limit fees or late fees or default rates of
interest, and that's where the profits just start racking up, and that's where
the credit card companies make their real money. So last year, they sent out
eight billion pre-approved credit card solicitations to American families all
over the country, hoping that every single one of those would be opened up and
someone would take the credit, and they would either make a little bit of
profit for the credit card companies or a whole lot of profit for the credit
card companies.

GROSS: Now, if you sign up for a low-interest rate with a credit card, that
low-interest rate might not last for long. Why not?

Ms. WARREN: Well, because the credit card company puts the low interest rate
up-front in great big letters and then somewhere buried back in fine print
reserves the right to change that interest rate and to change and change it
and change it, and they don't change it on the down slope, they change it on
the upslope.

GROSS: So what would give them cause to change it?

Ms. WARREN: Well, would you like me to read you one?

GROSS: Sure. You're going to read us part of a contract?

Ms. WARREN: Yeah, yeah. I actually brought one today. I thought you might
enjoy it. "Your APR"--that's your interest rate--"may vary except as stated
above. The APR for purchases and balance transfers is the greater of 13.99
percent or 9 percent over the index. The APR for cash advances is the greater
of 19.99 percent interest or 18.5 percent over the index. The penalty rate
APR is the index plus margin of up to 26.50 percent." And when I said `the
index,' there's a little asterisk, and if you look in the fine print, it says,
`The index is the highest one-month London Interbank Offered Rate (LIBOR) as
quoted in The Wall Street Journal on any day during the 90 days immediately
preceding the last day of each calendar month. You understand that the terms
of your account, including the APRs, are subject to change. The APRs are not
guaranteed and they may change to higher APRs. Fixed APRs may change to
variable APRs and vice versa. We reserve the right to change the terms at any
time for any reason in addition to the APR increases that may occur for
failure to comply with the terms of your account." Now, what all that language
said...(unintelligible)...

GROSS: Yeah, what does it say? Boy, you lost me! You lost me a long time
ago.

Ms. WARREN: That's right. When you got all the way to the end, the keyword
was right near the end when it said, "We have reserved the right to change the
terms at any time for any reason.' In other words, I read you all of that
jibberish, but the bottom line is they'll charge you whatever they want to
charge you.

GROSS: So they reserve the right to raise your interest rate at any time for
any reason. What are some of the typical reasons they give you?

Ms. WARREN: Well, the reasons--they don't give you a reason, let's start
there. They don't stick an insert in the mailer and say, `You'll notice your
interest rate went up this month for the following four reasons.' No, they
just change it and hope oftentimes that the customers won't notice but if the
customers do notice and if you happen to call, sometimes the reason is because
you went over limits. Sometimes the reason is because you were a day late in
paying. Sometimes the reason is because you took out a different credit card
somewhere else. Sometimes the reason is because you had a dispute with
another credit card company or with another creditor. Late on your car loan,
for example. Sometimes the reason is because interest rates when up in the
country generally. Sometimes the reason is because some clever MBA at the
company figured out that if they raised everybody's interest rate by 2
percent, they could rake in a couple of more million dollars and most people
wouldn't complain.

In other words, the reason is whatever reason the credit card company decides
is going to maximize its profits. They're looking for a number that will put
the most dollars in their pocket without making you so mad that you'll close
the account and walk away.

GROSS: Now you mentioned that they might raise your interest rate because you
were late in a payment to another creditor.

Ms. WARREN: Mm-hmm.

GROSS: One, how would they even know, and two, what business is it of this
credit card company if you're late with a payment to another credit card or to
a store or whatever.

Ms. WARREN: Well, you know, it's an interesting concept that didn't exist
more than about six years ago, but some clever marketing strategist figured
out that they could apply a term called "universal default" and what that
means is if you don't meet every payment that you're obligated to make,
everywhere, at every time, even if you're meeting payments to us, we're going
to go ahead and increase your interest rate, and by the way, not just by a
couple of points. We'll take you from that 11.99 percent that had been your
standard up to 29.9 percent, what's known as a default rate of interest, and
it caught on quickly, partly spread through the industry because again it was
another way to make profits for the credit card companies. They basically
just run the information off your FICA score to see if someone has done--it's
a credit report. They're running a credit report, then they check to see if
there's been any little dings somewhere else on your credit report, they jerk
the interest rate up, and they figure if you've had a ding with someone else,
you may be a little bit nervous about leaving them, so they've got a good
chance of collecting, instead of 11.99 percent interest, collecting 29.99
percent

GROSS: If you're just joining us, my guest is Elizabeth Warren. She's a
professor at Harvard Law School and an expert on credit card law and
bankruptcy, and the author of a couple of books, including, "All You're
Worth," which is financial advice to families.

You know, we're talking about the fine print and the credit card contracts
which most people don't know about and which subject you to all kinds of like
fees and raised interest rates. I think most of us who have credit cards have
gotten slapped with late fees or other fees, and how much do the credit card
companies rely on those fees for their profits?

Ms. WARREN: Well, that's what's been interesting. The fee portion of credit
card revenues has been the fast-growing part since about 2000. The old model
used to be that you lent out money and got back a little bit from the merchant
fee, and then those who paid over time paid interest, and that was
really--those were the two sources of money for the credit card contracts.
What's happened now, however, is the companies have figured out that by
imposing fees they're more likely to catch good payers, which I hope would
include you, but to get an extra, you know, $49 from you here and $39 from you
there and to do that for millions more customers, and yet it won't make you
quite mad enough to cancel the card and quit.

In fact, the pricing model for many of these is that they will impose a fee,
sometimes a fee for no reason at all. There was a company recently that just
evidently hit everyone with $75 fee, and then anyone who called and
complained, they just canceled the fee. So that way, they kept the customers
who were the ones who were most alert and crankiest, and they got an extra $75
from all the customers who were either inattentive or timid in dealing with
credit card companies. It's just a whole new pricing model out there.

GROSS: I will say, I had to contend with this once in the recent past, and I
had to complain about it three months in a row before--each month they would
agree to do it and each month it would be back again.

Ms. WARREN: Well, you know, that's part of the problem here. My husband and
I talk about this. When one of us hits a problem on our credit card company
and we both know what the answer is, call, and they will straighten it out but
it will cost us time.

GROSS: Mm-hmm.

Ms. WARREN: You'll be on the phone, you know, 15, 20 minutes every single
time, and it won't get fixed in one call. And the credit card companies count
on this. You know, you really have to remember here--think of it this way.
It's you against an entire army of MBAs whose job is to do nothing but figure
out how to maximize profits for the credit card companies, how to pick your
pocket. So if that means--some of these credit card companies--if that means
leave you on hold for at least nine minutes because half the people will just
give up and decide they don't need to complain. They'd rather pay the $39
than have to wait any longer on hold, that'll be OK. They'll do it. And
then, you know, you put somebody polite on the phone so that when they finally
come, `Oh, yeah, yeah. We'll fix it.' And they don't fix it the first month
so you have to go through the whole process a second time. And, oh, they're
very apologetic the second time and really, really sorry the third time. But
think, if you multiply that times six million cardholders, that's a lot of
people who just give up and pay $39.

GROSS: Now...

Ms. WARREN: And that's a lot of revenue.

GROSS: ...what you're saying sounds very cynical. You're saying that a lot
of credit card companies will keep hitting you with the same fee that they
previously promised to take off the bill, and they're doing it in hopes of
just like wearing down your resistance. What evidence do you have that this
is intentional as opposed to just a kind of bureaucratic problem?

Ms. WARREN: Well, look. They keep track. They know. Mistakes of adding a
$75 extra charge to your credit card. That doesn't happen because it slips
through the credit screen. Think about it the other way. How many errors go
in the other direction? How many things have you bought that didn't
eventually show up on your credit card charge? The mistakes all run in one
direction, and the direction they run in is in the direction of the credit
card company. You know, there have been cases now where ex-employees of the
credit card companies come clean after the fact, rat the companies out and
ultimately sometimes end up with huge lawsuits against the companies for
having defrauded their customers. So, is there a credit card company that
admits this is their policy. No. But if you put the evidence together, from
all of the customers who have called in from all the times that the card
companies themselves had said, they will change a practice across the board
and then remove it for anyone who calls in and complains, it's not hard to put
this together and understand what the profit maximizing position for some of
these credit card companies is.

GROSS: My guest is Harvard law professor Elizabeth Warren. We'll talk more
about what to look out for with your credit card after a break.

This is FRESH AIR.

(Announcements)

GROSS: If you're just joining us, my guest is Elizabeth Warren. She's a
professor at Harvard Law School, and she's an expert on credit card law and
bankruptcy and the author of a couple of books, including "All You're Worth,"
which is advice to families about what to do with your money.

We were talking about how complicated and inscrutable the language on most
credit card contracts is, and you once did an experiment about this with some
your students at Harvard. Would you tell us about this?

Ms. WARREN: Well, it was not a deliberate experiment. I had said a couple
of harsh things about credit card companies a couple of times during the
course of my bankruptcy class, which was a third-year class in the spring. In
other words, I had students that were just a couple of months away from being
full-fledged Harvard Law School graduates, and so a student came into my
office early one morning and tossed down a credit card agreement in front of
me, a solicitation, and it said 3 percent cash back. It had a big lime green
sticker on the front of it. And he said, `Now, Professor Warren, even you
would have to admit this looks like a great deal.' And I said, `Well, I'll
tell you what, let's see.' So I walked back to the photocopy machine and I
made a photocopy front and back of this offer, and I took it in and I passed
it out to my bankruptcy class, nearly 80 students, and I said, `OK, committee
of the whole. You can all talk about it, figure it out however you want.
Tell me--I just want you to tell me two things. What's the effective interest
rate on this card and how do you get your 3 percent cash back?' And, you know,
the people kind of chuckled and I said, `Go.' And I looked at the clock. And
the students started calling out, `Oh, look down here in clause 21, and it
says--oh, wait, no.' And then somebody else would say, `Well, wait. That's
taken back over here in clause 14,' and they went back and forth and back and
forth and back and forth. It took an entire class, working together, calling
out, trying to reason, putting fingers in the right places, until they finally
figured out that they think the base rate on that card was 17.99 percent and
you only got 3 percent cash back when you were paying 17.99 percent interest
on the card. In other words, it was a 14.99 percent interest card, and it
took 80 near-lawyers the better part of an hour to figure that out. Now you
tell me what chance the ordinary customer has to sit down and read it and know
what the terms of his or her credit card are.

GROSS: Now everybody knows that you need to pay a minimum balance every
month. Now with most credit cards, if you pay--if you have like--if you owe
money and you just pay the minimum every month, do you have any clue how long
it would take to pay off everything that you owe?

Ms. WARREN: Well, let me put it this way. The credit card companies sure
hope you don't have a clue, because if you did, you'd be very likely to stop
using your credit cards. That's why they have fought legislation in
Washington and legislation, for example, in the state of California that would
require a credit card company to give you that piece of information, that is,
one extra line on your credit card that's, you know, after they tell you what
the minimum monthly payment is that says, `and if you make the minimum monthly
payment, it will take you this number of years and this number of months to
pay off your credit card.'

So let me give you an example based on a fairly typical credit card. If a
young mother and father-to-be went out and spent $5,000 on the crib and the
car seat and furnishing the nursery and setting up with diapers and all the
fun things to get a baby going, and put that on their credit card, as the
advertisement suggests they should and they made the minimum monthly payments
every month, the child would be grown, have graduated from college, have
married and have children of his or her own before that credit card bill would
be paid off. It would take about 34 years under current amortization.

GROSS: Now, you like to pay in full every month.

Ms. WARREN: Yes.

GROSS: But that means the credit card company isn't going to be making a lot
of money off of you each month. Do they do things to try to dissuade you from
paying in full?

Ms. WARREN: They do everything they can to try to get me to use my credit
card more and to shift around on the dates when my credit card is due so that
maybe I'll slip or stumble and not pay on time. You know, in the industry,
I'm what's known as a deadbeat, somebody who pays in full, on time, because I
don't produce a lot of profits for the credit card companies. The people who
are the sweet spot are the ones who are stumbling and slipping and falling and
carrying balances, and those are the ones for whom many credit card companies
are fighting tooth and nail to get them as customers. So if you think you're
popular, try skipping a couple of payments and find out how popular you'll be.

GROSS: Elizabeth Warren is a professor of law at Harvard University. She'll
be back in the second half of the show.

I'm Terry Gross, and this is FRESH AIR.

(Soundbite of music)

(Announcements)

GROSS: This is FRESH AIR.

I'm Terry Gross, back with Elizabeth Warren. She's written about and
testified to Congress about unfair card practices. She's a professor of law
at Harvard and is an expert on credit card and bankruptcy law. Her books
include "The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going
Broke."

The credit card industry was deregulated in the early 1980s. How did that
change the industry?

Ms. WARREN: Well, America has always had usury laws, meaning there's an
interest rate maximum that can be charged, and if you can't figure out how to
make a profit without charging more than the maximum, you can't lend the
money. To charge, for example, in the state of Pennsylvania, one point, to
charge more than 18 percent was called loan sharking, and only very shady guys
did it and you could go to jail for it. But in 1979, the United States
Supreme Court had a case in front of it interpreting a very obscure piece of
banking legislation in which the question came up, if you had a bank, say in
Montana, and it was lending money to a customer, say, in California, and the
two states had different usury laws, which one would apply? And most people
thought it was the customer's, that is, you would be protected by your own
state laws. Pennsylvania people are protected by Pennsylvania law; California
people by California law. But the United States Supreme Court read this, nah,
kind of ambiguous language, and they said, `Nah, we think actually what
Congress intended here is it would be the state where the bank is
incorporated. Even though it's a federally chartered bank, it's where the
bank is located.' And so you can almost hear this pause at this moment and
South Dakota says to itself, `Hmm, let's see. Jobs, clean industry, and most
of the people who have credit cards don't live in South Dakota.' So South
Dakota repealed its usury laws, and Citibank said, `South Dakota, here we
come,' and moved to South Dakota and started issuing credit cards all over the
country, effectively circumventing all of the local usury laws. Well, the
next thing that happens is Delaware says, `Ooh, me too. Me too. We can raise
our usury rates so that companies will come here,' and then the game was afoot
so that we effectively engaged in the single biggest policy change in the
credit area, the whole consumer credit area through an obscure Supreme Court
decision interpreting some ambiguous language. Congress could have easily
reversed it but did not, and so we went from a country that had usury rates
from colonial times until 1979, and then they effectively just died.

GROSS: Now just a couple of years ago in 2005, Congress passed tighter
bankruptcy laws. How has that affected the credit card industry and consumers
who have credit cards?

Ms. WARREN: Well, it has emboldened them. By making it harder for customers
to say, `That's it. You have loaded me up on these credit cards that I could
not ever possibly pay off, I'm headed to see a lawyer and I'm headed from
there into the bankruptcy courts.' By just making it a little harder to do
that, the credit card companies anticipate that they can squeeze customers
even harder. So, let me just give you an example. We've see the direct proof
in what happens. Credit card companies, between 2005 when--before the law was
in effect and into 2006, the first year after the law went into effect,
increased the number of mailings offering pre-approved credit cards by 30
percent. I mean, you weren't getting enough prior to the change in the
bankruptcy laws. They're out there looking harder for more customers and
particularly for shaky customers. They're pushing them harder with tricks and
traps pricing, knowing that they can hang on to them longer because those
people will be less likely to declare bankruptcy than they were under the old
laws. So it's been a real heyday. It's the credit card companies who pushed
for this law. They were the ones who literally drafted the laws. Their
lobbyists wrote it, and they paved its way through Washington, got it through,
and now they're reaping the profits from it.

GROSS: What is the credit card lobby like?

Ms. WARREN: Well, it's rich. They sure do dress nice, and they sure spend a
lot of money. Financial services over the last six, seven years, has been
either the number one giver or one of the top three givers in campaign
contributions every single year. They have really spread their money around
Washington. The bankruptcy law that you just mentioned, I talked to senators
and representatives who said that they received two and three personal calls
from lobbyists--I mean, in person, people who showed up in person--two and
three a day, every single day, month after month after month, to emphasize
just how important it was for Senator X or Congressman Y to vote the right way
on this bankruptcy bill. They got a lot of money to spend.

GROSS: How do you choose which credit cards you're going to take out and how
many you're going to have?

Ms. WARREN: Oh, well. How many I'm going to have is easy. I have two.
That's all I want.

GROSS: Do you study the interest rates before you agree to the terms of the
credit card?

Ms. WARREN: No, there's no point in it.

GROSS: You're not going to change it anyway?

Ms. WARREN: I'm not going to change it anyway, lady. I mean, you know. We
all think we're being so clever. We think we're making money off these credit
cards and the very few studies that have been done show that even the smartest
among us are losing money on these credit cards. We're paying for the
privilege, and what's remarkable about this is the credit card companies
themselves are not making a little bit of money on it. They're making huge
amounts of money. They're making grotesque amounts of money and, look, I'm a
commercial law professor. I like profit. I think profit is a terrific thing.
I think contracts are a terrific thing. But this is an area that has just
spun out of control, and it's costing Americans more than $90 billion a year.
That's what we're paying for this credit card system, and it's mostly ordinary
middle-class families. People who have jobs, people who go to work every day,
who are spending just, on average, about 14, $1500 a year in interest, if
nothing goes wrong, and thousands and thousands of dollars in interest if they
have a slight stumble, a slight slip, a slight fall. We just--we have pushed
Americans to a point that they live in a--it's like living on the edge of a
cliff. They start to fall over, they scramble back. That's where much of
middle-class America is living today.

I saw one--I just have to tell you. It just came out last week, one of these
surveys with Bankrate. Thirty-six percent of Americans with credit cards,
that's one in every three Americans who's got a credit card, is worried
they're not going to be able to make their credit card bills. That they can't
pay their bills. Sixty percent of Americans are carrying a balance on their
credit cards. Forty percent of Americans missed at least one credit card
payment in the last two years. Twenty-three percent, one in every four, every
American families, one in every four American families is maxed out on at
least one credit card. And here's the one that just scares me to death. One
in every seven Americans today is dealing with a debt collector because they
can't make their payments. This is a world turned upside down. This is not
what America looked like in 1980. This is not what America looked like in
1997. But this is what's happened to America in just the last half dozen
years.

GROSS: My guest is Harvard law professor Elizabeth Warren. We'll talk more
about what to look out for with your credit card after a break.

This is FRESH AIR.

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GROSS: Let's get back to our interview with Harvard law professor Elizabeth
Warren. She's an expert on credit card company deceptive practices.

The statistics all say that Americans owe more in credit card debt than they
ever did before. I mean, is that just because credit cards are more easily
available than they were before or are there other reasons for that?

Ms. WARREN: Well, it's really two things working together. One is that
credit cards are much more heavily marketed than they ever were before. You
know, we don't see ads on television for saving your money, for putting it
away and having it for a rainy day. Instead, the credit card companies are
spending literally hundreds of millions of dollars to try to get you to take
one more debt. That's what it's really about. I mean, their product is a
fungible product. It's just dollars. They only make their money if you
really borrow.

The other reason is that American families are just under a lot more economic
pressure than they have been in the past. Over the last generation, median
wages for a fully employed male have remained flat. That is, you know, today
a man who's fully employed earns about $800 less than a fully employed man did
30 years ago. But expenses for the basics, like a three-bedroom, one-bath
house, has gone up by 70 percent in inflation-adjusted dollars. The cost of
health insurance has gone up. The cost of transportation has gone up. The
cost of child care has gone up. So families, even hard-working families, even
two-income families, just have less money at the end of the month than they
used to, and they increasingly are using their credit cards to pay for things
like medical care and school supplies. I really wish the run-up in credit
cards was nothing more than too many iPods and, you know, too much Prada and
too much Gucci, but the serious research on this shows that the run-up has a
lot more to do with people who lose their jobs and who get sick and who are
turning to credit cards as a way to try to make it to the end of the month
when they've run out of money. It's not easy out there for families.

GROSS: So, you know, we're talking about late fees and how credit card
companies make a lot of money on these late fees. You don't have a lot of
time to pay your bill before your time is up and you owe the late fee. How do
they calculate how much time they give you in that window before you're hit
with a late fee?

Ms. WARREN: Oh, there's some very clever things that go on here. So one of
the tricks that some of the companies use is that they give you a date when
your payment is due--let's just say the seventh of the month--and they do that
for six months running, and then with no notice at all, they move it back to
the fourth of the month on the next bill. So that a much higher proportion of
people will simply get it wrong, and they will think they're the ones who
messed it up, who didn't get it right. Another trick for collecting late fees
is for people who live on the East Coast, the preprinted envelope for where
your bill is to be mailed is to some small city on the West Coast, and always
a small city because it takes mail longer to make it both all the way across
the country and then out of the major metropolitan area and into a small town.
But if you're on the West Coast, they make your bill processing center on the
East Coast in a small town, so that it will take everybody longer in the mail.

There are allegations that various credit card companies delay opening bills.
There are even allegations about companies that have allegedly shredded bills.
Why? Why would anyone ever shred a payment? The answer is so they can get
those late fees. And, sure, there'll be some customers who will complain.
There'll be some customers who will get furious and stop carrying the card.
But the truth is most of us have jobs and dinner to make and homework to check
for the kids and the dog to feed, and we won't notice and we'll just pay it.
We'll think we were the ones who were dupes and didn't get it right, and
that's how the credit company rakes in another billion dollars.

GROSS: You know, some people say that even if you have a credit card that you
no longer want to use, for your credit rating, keep that account open. Is
that good advice?

Ms. WARREN: Well, it depends. I closed the last few credit cards that I had
a few years back, and it hasn't hurt, but that's because I don't carry a
balance on my credit cards that nears the cap. What you always want to have
on your credit card both, frankly for your FICA scores and for your own peace
of mind, is you want to have room to run up a balance if an emergency ever
struck and you needed it. That room on your cards improves your credit score.
So if canceling out your unused cards means you're out of extra room, probably
a bad idea from a FICA point of view.

GROSS: Mm-hmm.

Ms. WARREN: If not, get rid of them.

GROSS: We're talking about credit cards. Like say your credit card rating
becomes bad because you've been overdue or you missed a payment or something.
Are credit reports being used in different ways than they used to be?

Ms. WARREN: You know, the whole idea behind a credit report used to be that
creditors needed a way, they thought, to talk to each other, to say, in
effect, `Well, look if, you know, he's not making the payments to Citibank,
he's not likely to make the payments to me, so I'm not going to lend him any
money,' and that was kind of the basic idea behind credit reports. Credit
reports are now used for job applications. They're used for determining
whether or not you can get homeowners insurance. In other words, if you get
into a bad place with your credit card company, the effect may actually be to
diminish your total life chances, that it can impair your ability to get a job
or to have car insurance or life insurance, health insurance.
It...(unintelligible)...things.

GROSS: Are more employers now checking the credit ratings of people who
they're considering hiring?

Ms. WARREN: Yes, ma'am. Yes, ma'am. Many employers now check credit
ratings and just won't hire people who have dings on their credit. And, of
course, let's be clear here, bill collectors now know this, and so among the
things that some bill collectors will now tell people is `And if you don't pay
us, let me tell you where else it's going to hurt you.' I mean, this really
turns up the heat under what it means to fall behind on your credit cards.

GROSS: I want to say something in praise of credit card companies.

Ms. WARREN: OK.

GROSS: OK. I've had my number stolen by who knows who but I--you know, a
couple of times I've had a lot of charges that I had nothing to do with. And
the credit card company cleared it, they cleared it up. They did a
commendable job with it, and I didn't have to pay anything extra.

Ms. WARREN: You know, I think that's wonderful. I'm delighted for you, but
that's federal law. It's not your credit card company that protected you.
Once you show that it's not your charge, the credit card company legally can't
charge you. Those were federal laws that were passed back in the 1970s that
protected you. They were nice to you. They straightened it out. They took
it off your bill--because if they hadn't, they would have been in violation of
federal law.

GROSS: And they've called me a few times and said, `These charges seem very
out of character,' and although they were actually mine, I kind of appreciated
the call because they might not have been mine, and I don't mind spending a
minute on the phone to clear that up but I thought...

Ms. WARREN: And...

GROSS: ...that's a way to protect me.

Ms. WARREN: ...I don't mind, but you have to understand, it wasn't a way to
protect you. It was a way to protect themselves because if a stranger had
been using your card, a thief had been using your card, the credit card
company would have been responsible for those charges, not you. They were
asking for your help to keep themselves from having to pay that extra money.
They weren't kindly trying to help you out. I hate to destroy your illusions,
but they were protecting themselves, not you.

GROSS: Well, I want to thank you very much, Elizabeth Warren, for talking
with us.

Ms. WARREN: It's a pleasure to be here.

GROSS: Elizabeth Warren is a professor of law at Harvard University.

This is FRESH AIR.

(Announcements)

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Review: Jazz critic Kevin Whitehead reviews "Inner Diaspora" by
saxophonist and clarinetist Ned Rothenberg
TERRY GROSS, host:

Saxophonist and clarinetist Ned Rothenberg has always been a musical
cosmopolitan. Early on, he studied jazz with George Coleman and shakuhachi
flute in Japan. Later Rothenberg put together his North African-influenced
Double Band and toured in duos with the Tuvan throat singer Sainkho Namchylak
and the shakuhachi virtuoso Katsuya Yokoyama and English saxophone improvisor
Evan Parker. But jazz critic Kevin Whitehead says Rothenberg's new album
sends him back to his roots.

(Soundbite of music)

Mr. KEVIN WHITEHEAD: Ned Rothenberg on clarinet. As he tells it, recording
was under way for the new album by his long-running trio Sync Plus Two Strings
when he began to think this might be the, quote/unquote, "Jewish record"
producer John Zorn had been requesting for years. As a secular Jew and
musical globalist, Rothenberg had resisted the idea. But this time, prompting
himself with a Mideastern scale or sephardic syncopation or two, he heard the
music filtered through his own bedrock culture. So he called his record
"Inner Diaspora," marking a personal journey that began with one culture and
moved out into many.

(Soundbite of music)

Mr. WHITEHEAD: Ned Rothenberg's core trio reflects multiple diasporas on
dispersed populations. He goes way back with African-American guitarist and
bass guitarist Jerome Harris, who often plays with drummer Jack Dejohnette and
has toured with Sonny Rollins. Calcutta-born New-York-based tabla virtuoso
and dumbeck player Samir Chatterjee has played with musicians from Ravi
Shankar to Ravi Coltrane. The trio's members all step outside their home
traditions in a convincing way.

(Soundbite of music)

Mr. WHITEHEAD: Ned Rothenberg on the Japanese shakuhachi. The added strings
on these sessions are violinist Mark Feldman and cellist Erik Friedlander.
They played together in a few bands, including Zorn's Masada String Trio and
have a chamber duo's seamless blend.

(Soundbite of music)

Mr. WHITEHEAD: Bowed strings can make any music more soulful and poignant
but Rothenberg often puts strings at the service of the overlapping rhythm
patterns he loves above all. The irresistible dance of wheels upon wheels
that propels music around the world.

(Soundbite of music)

Mr. WHITEHEAD: Ned Rothenberg's expanded resources let him keep those hoops
a-spinning, but the strings do bring forth the lyrical side of his personality
sometimes crowded out by other interests. Maybe that's another aspect of his
"Inner Diaspora." He reaches down deep for that heartfelt stuff then takes it
out on the globe for a spin.

(Soundbite of music)

GROSS: Kevin Whitehead teaches English and American Studies at the University
of Kansas, and he's a jazz columnist for eMusic.com.

(Credits)

GROSS: I'm Terry Gross, reminding you that you can download podcasts of our
program on our Web site, freshair.npr.org.

(Soundbite of music)
Transcripts are created on a rush deadline, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of Fresh Air interviews and reviews are the audio recordings of each segment.