TERRY GROSS, host:

This is Fresh Air. I'm Terry Gross. Like most of us, Elizabeth Warren has a lot of questions about how the financial bailout is working and whether it's succeeding in helping Americans deal with the economic crisis. But unlike most of us, she has the power to ask for answers. She is the chair of the new Congressional Oversight Panel that was created to oversee the bailout and assess its impact on the economy.

Yesterday, only two weeks after its initial meeting, the panel issued its first report. The report is basically the list of questions that will guide the panel's work. Questions like what is the Treasury Department's strategy? Is it working to stabilize markets and reduce foreclosures? Is the public receiving a fair deal? And what is the Treasury doing to help the American family?

Elizabeth Warren is a law professor at Harvard and is an expert on credit and bankruptcy law. She's joined us in the past to talk about credit card come-ons and traps to watch out for. Elizabeth Warren, welcome back to Fresh Air. And may I say, congratulations, I think, on your appointment. And as chairman, it's quite a job you have facing you.

Dr. ELIZABETH WARREN (Law, Harvard Law School; Chair, Congressional Oversight Panel): Yes, it is.

GROSS: So exactly what powers does your oversight panel have?

Dr. WARREN: Well, we have the power to hold hearings. We have the power to investigate. And most of all, we have the power to ask really hard questions.

GROSS: And that's basically what you've done in your first report. It's basically a list of questions and questions within those questions. Why is that the direction you've taken in your first report?

Dr. WARREN: Well, we think that the frame is important. You can't get to a good answer if you're not asking good questions. So this is a report that's tough, and it's fast. And I think fast was important here, too. You know, an ordinary congressional panel would have taken three months to get up and running and would have fooled around with hiring staff and deciding who had what tasks, and you know, setting up deadlines and timelines and so on. We didn't do that.

In 13 days, we produced a hard-biting document that pushes hard for some real answers. We don't have a phone. We don't have a photocopier. We don't have a coffeemaker yet, but we have a very strong report. And there's another report coming in 30 days and another one in 30 days after that and another one 30 days after that. I think that sets the stage.

GROSS: Can you give us an overview of how much money has been spent so far as part of the TARP program and who's gotten the money?

Dr. WARREN: Well, I can give you a little bit of an overview. $350 billion has been committed to Treasury - that is, it's theirs to start to spend in ways they want to spend. They've spent probably somewhere in the neighborhood of about 150 billion of that. You'd think we could keep a little closer track on this, but the numbers are a little loose partly because they have started a program where some of the money has gone out and other money is kind of in midstream for going out. So the point is, you know, many billions, certainly over the $100 billion mark, and more committed that's in the pipeline.

GROSS: So who has gotten money so far from the bailout plan?

Dr. WARREN: Well, it's been 54 so-called healthy banks, plus AIG Insurance Company and CitiBank.

GROSS: Now, Barney Frank, the chair of the House Finance Committee, has said that his biggest concern remains the inability of the Treasury Department to address the rash of foreclosures. Now I know this is a big concern of yours. Would you give us a sense of the proportion of the problem of mortgage foreclosures?

Dr. WARREN: Oh, goodness. The mortgage foreclosure problem is huge. Credit Suisse just came out with a report in which they estimate that over the next couple of years, we will have eight million families in foreclosure. That's 16 percent of homeowners with mortgages are going to be in foreclosure. Terry, that's one in every seven families who has a mortgage that's out there are going to lose the house through foreclosure, not sell it under kind of forced conditions. That's one in every seven, you know, moving into a rental apartment, one in every seven moving back in with mom, or for some, even, onto the streets.

This is an enormous social dislocation and enormous economic dislocation for every one of these families and incredibly costly to go through this process. And frankly, incredibly expensive for the investors in these mortgages since the current estimates are that when you push a house through foreclosure, you lose somewhere between 30 and 50 percent of the true market value of the house. It just gets destroyed in the foreclosure process. So off the top, we're just talking about the people who are directly touched by these foreclosed mortgages. We are talking about a huge portion of America, and frankly, a large number of investors who are going to be hit by this.

GROSS: So this isn't just a problem for the people who lose their homes. It becomes a larger social and economic problem for America.

Dr. WARREN: Well, that's exactly right. And in fact, let me put that in even more context. What happens is when homes are being pushed through foreclosure, nobody else can sell a house. I mean, try selling a house when there are two houses on your block that are in foreclosure. No buyer is going to step in and pay you market price if they know that next week or three weeks from now there's going to be a house available at half of that price, at 30 percent of that price, and they might be able to pick it out at a foreclosure sale. So what happens is the foreclosures themselves start to beat the markets down and beat them down hard. That now starts to have implications in other directions.

So you got a great new job offer in Denver but you've got to leave Atlanta. It's a long commute from Atlanta, and the reality is you can't sell your house in Atlanta. Or you're getting on in years and you've decided now is the time when you want to go to an assisted-living facility. Your plan for the last 40 years had been you'd pay off your house, you'd sell your house, and then you'd use that money to be able to live in something that was more appropriate for your latter years. You can't make that adjustment. So what we get is we get a market that just literally doesn't work anymore.

GROSS: Does it say anything in the TARP legislation about whether part of the money should be used to prevent foreclosure, and if so, how it should be used?

Dr. WARREN: The Treasury has enormous degrees of latitude in how to commit the $700 billion that Congress has granted them. So I want to make the pitch in this direction. Congress has made it clear through the statutory language that they are deeply concerned about the mortgage foreclosure. They wanted to know how Treasury is helping to address it. But this is where Treasury should want to go.

There's no such thing as saving banks. If families are going down, if the middle class is being decimated, if communities are being destroyed, if there is an America, a real America that just isn't working economically, if they're losing jobs, if they can't pay their debts, if we're really caught in a downward spiral, the idea that we can somehow save America by stuffing dollars in bank vaults, which is the principal healthy banks' idea that the Treasury is using this money for, that just doesn't make any sense.

So in my view, if Treasury sees its goal as trying to help put not just the financial system into solvency but help the country get back into solvency, then dealing with this mortgage foreclosure crisis is absolutely essential. It is not possible to do the former without doing the latter.

GROSS: If you're just joining us, my guest is Elizabeth Warren, and she is the chair of the new Congressional Oversight Panel to oversee the implementation of the financial bailout program. She's also a Harvard law professor and she's joined us several times in the past on Fresh Air to talk about issues pertaining to credit cards. Let's take a short break here and then we'll talk some more. This is Fresh Air.

(Soundbite of music)

GROSS: My guest is Elizabeth Warren. She is the chair of the new Congressional Oversight Panel to oversee the implementation of the financial bailout program. She's also a Harvard law professor and an expert in credit law.

Part of the reason why we have this crisis in the first place, I mean, a big part of the reason why we're in a financial crisis is that people invested in mortgages that they couldn't afford, that they didn't really understand, where the rates got higher instead of remaining the same or getting lower and they couldn't afford their mortgages anymore. So, do you feel like the cause of the crisis isn't quite being addressed in the way the money is being handed out?

Dr. WARREN: I do. Now what we've got are a lot of financial institutions and other investors who are holding assets that are valued based on the assumption that tens of millions of American families are going to make payments in full on the subprime and other lousy mortgages that would give the investors 10 and 15 percent rates of return. And that's just not going to happen. People are not able to make those payments and they are not going to make those payments. And so we end up with our financial institutions holding a big basket of assets that are wildly overvalued.

Now, every time the home mortgage market drops, every time somebody goes through a foreclosure, that basket of assets that the bank is holding shrinks in value. So if Treasury wants to save the banks, what they've got to do is they've got to pay attention to what's happening in the housing market. Until the housing market finds a level price and we get these mortgages cleaned up and most people are in mortgages that they can pay, that are affordable mortgages, that make modest rates of return but are steady in terms of the payments, until we have that moment in time, this crisis will not begin to resolve itself.

GROSS: Sheila Bair, who is the head of the FDIC, the Federal Deposit Insurance Company, proposed a plan for preventing more foreclosures. Can you describe that plan?

Dr. WARREN: Yes. The Bair plan has some really terrific features to it. First of all, she wants to look directly at the families and say, you know, we've got to do something before they go into foreclosure, and the families we need to focus on are those most at risk. That is, those who are in mortgages that are resetting and that are entirely unaffordable. I think one of the most interesting features of her proposal is a little part she put in that effectively offers to pay a bounty to the loan servicers who are currently handling the mortgages to entice them to come in and do a workout to get these families into more affordable mortgages.

You know, one of the bizarre elements of what's happened over the last 10 years in this mortgage market is that the old days, when a bank or savings and loan lent you the money, carefully scrutinized whether or not you'd be able to pay it back and then held onto it, was that if something went wrong - you lost your job, you know, you couldn't pay, you went through a divorce maybe - the institution that made the loan stood to lose it all, and they would sit down and negotiate with you because there was one person there, one company. And they'd negotiate, and they'd kind of figure it out. Hey, look, it's not affordable at all. Let's do something. It's - maybe if we gave you, you know, three more months to pay or we put you in a longer-term mortgage and lowered your payment. So a lot of troubles loans never made it to foreclosure in the old days.

But today, mortgages - particularly these what are called subprime - were so incredibly attractive because unlike typical mortgages that returned, you know, like a percent and a half rate of return, these things were offering 15 percent rates of return. I mean, they were just huge. And the people who were selling them were telling the investors, hey, mortgages, you know, people always pay their mortgages.

So investors flocked over. These things were sliced and diced into what are called securitized pools, and that meant nobody holds a mortgage anymore. Not nobody, there are some, but the market changed fundamentally. So somebody came into the game who's called a loan servicer, and the loan servicer is this business that takes your money and then divides it up and pays it out according to all the people who are in this fancy assets-securitized pool.

Well, what's happened is when you get into financial trouble, a lot of these loan servicing agreements are set up so that the loan servicer makes money when you pay and makes money when there's a foreclosure, but sure doesn't make any money from doing the complex work of a workout. So we've got somebody right in the middle of the process who has no reason to move the process forward. In fact, quite frankly, sometimes has a financial reason not to move it forward.

Sheila Bair has been really smart in her proposal by saying, look, let's just acknowledge that. Let's find a way to compensate the servicer so that we can get these deals done. You know, it's not pretty but it's real politics of the moment.

GROSS: I didn't know that there was a way of renegotiating mortgages that have been securitized, mortgages that have been packaged with other mortgages and packaged with other mortgages and then divided up and sold as securities. I figured, how do you untangle that? Is that even possible? But apparently there's a way, huh?

Dr. WARREN: Well, the answer is we hope there's a way. I can think of two. One is the servicer simply does it, is then judged as custodian on a sort of business judgment standard and barrels on through. Now, I want to be clear here. I'm not giving legal advice because servicers got sued last week by investors who said, don't renegotiate those. You know, I own a tenth of a slice of tranche 42 and trust number 1542 and 36. And I don't want you renegotiating. We'll see how that one goes on the lawsuits. So it can be dicey for the servicer, and there's a big dispute right now how dicey, and Congress has talked about giving the servicers some insulation, some protection.

The other option is to change the bankruptcy laws, and then we have a federal overwrite. If a family went into bankruptcy and stripped down the mortgage - that is, just by example, if they had a home that was worth $100,000 and the mortgage was $140,000, the problem is they can't refinance that home. They can't get into a 30-year fixed-level payment mortgage that they could afford because they have to pay off the whole mortgage in order to be able to refinance. And you know, who's going to lend you a $140,000 on a $100,000 home?

So they could, if the laws were changed, go through bankruptcy, and they could write down their mortgage to 100,000, and then they'd be in a position to be able to refinance. At that point, the tangled servicing pools by federal law simply have to accept the renegotiation. They have to take the writedown. It forces them to acknowledge the very real economic loss that's already out there, that their paper is, in fact - you know, these little pieces of paper they're holding - may say, you know, you own a slice of $140,000. But the reality is, hey, it was 100,000 backed up by a house, and you know, $40,000 of something that looks like credit card debt, and that's just a risk you took.

GROSS: There is a proposal now to have the Treasury Department, as part of the bailout, subsidize 30-year home mortgages and lower interest rates for new homeowners. So it would be new people buying homes could get low, four and a half percent mortgages. So that would be really good thing for new homeowners, but that won't help the people who were trapped in the subprime mortgages who now can't afford to pay their mortgages. So this must be pretty controversial?

Dr. WARREN: You know, it's not only controversial. I'm not sure how it makes sense when you put the pieces together. I understand that giving subsidies so that new homebuyers will come in is supposed to stimulate home purchasing. But in a market in which foreclosures are continuing to go up, I'm not sure that the difference between a - you know, five and a half percent mortgage and a four and a half percent mortgage is going to cause people to jump in and say, oh, I'll buy right now while the market is continuing to lose 10, 20, 30 percent of its value because there are houses on this block that are already in foreclosure.

In other words, the market is not being dragged down because there aren't enough new buyers. They aren't enough new buyers because the market is being dragged down by these foreclosures. You know, but this raises a point that's problematical all the way through this in how the Treasury Department has been approaching the problem. And that is, you can't just come in and take one little piece and say, oh, I know what I got. I got - you know, I'm going to fix one thing over here and I'm going to try to do one thing over there. It requires a coherent strategy.

If we understand the problem now is in the homes - that's the start of it - in the rising foreclosures and the steeply dropping value of these homes, then we need a coherent strategy, and maybe enticing new buyers in is part of that strategy, if coupled with a way to deal with the foreclosures. The two working together could really give us a solution here. But just doing the front end, trying to attract in new buyers without doing anything about the foreclosures, I think that's just giving away money and not getting anything in return for it, not getting any real effect in the economy.

GROSS: Elizabeth Warren will be back in the second half of the show. She chairs the new Congressional Oversight Panel created to monitor the bailout and evaluate its impact on the economy. The panel released its first report yesterday. Warren is also a professor at Harvard Law School. I'm Terry Gross, and this is Fresh Air.

(Soundbite of music)

GROSS: This is Fresh Air. I'm Terry Gross. We're talking about the financial bailout and if it's addressing the financial problems of American families. My guest, Elizabeth Warren, is the chair of the new Congressional Oversight Panel created to monitor the $700 billion bailout program and assess its impact on the economy. Warren is a law professor at Harvard and is an expert on credit and bankruptcy law. The panel issued its first report yesterday outlining the questions that will guide its work.

Are there other questions you're asking as the chair of the new Congressional Oversight Panel to oversee the implementation of the bailout program, about how the bailout is going to address American families who are suffering financially?

Dr. WARREN: You bet. One of the areas that I'm really interested in is that we are - it's called re-capitalizing the banks. What it means is we're putting a lot of money into these banks who apply for it. And yet, so far as I can tell - I want to put this in the form of a question - there don't seem to be any restrictions on any of the banking practices. So you know, if these are banks that are raising their interest rates on customers for no reason at all, you know, that are engaging in lots of tricks and traps, pricing that you and I have been talking about in the past, there is not statement that look, if we give you this money, taxpayer dollars are not supposed to be used to subsidize lousy practices that prey on American families.

Similarly, we haven't asked, what are you going to do with the money? So there are small businesses out there that are literally starving to death because they can't get money. I'm talking about, you know, AAA-rated folks who've got great credit, who've had long relationships with their banks, and they're simply told, sorry, we're not lending it out. We're keeping it our vaults.

Now, I think that if we're going to put money in the banks with the notion that those banks are then going to lend it out and that's what going to keep the wheels of commerce turning, then we ought to be accounting for that money. We ought to see to it that the money is, in fact, moving out in the way of loans, good loans to small businesses.

You know, I want to point out, this is not crazy. The British put money into their banks, and they just made it an explicit term. They said, hey, listen, you can have this - you know, our government money, our taxpayer money to make your banks stronger, but in return you have to agree that small and mid-sized businesses get a certain amount of loans, and we'll compare your lending portfolio today with what it was a year ago, and if we're not seeing taxpayer money used in a way that helps commerce, then you're not getting it. It's that kind of accountability that the Congressional Oversight Panel is going to ask for.

GROSS: Now, there is the TARP program, which is the bailout program, and there is also something called the Term Asset-Backed Securities Loan Facility, and this is a program to deal with student loans, auto loans, credit card debt. Is that part of what you're overseeing?

Dr. WARREN: Yes, ma'am.

GROSS: OK. So the acronym for that program is the TALF, the Term Asset-Backed Securities Loan Facility.

Dr. WARREN: Isn't this appalling? I really hate this...

GROSS: Yes. But tell us, what are the plans here in that program to deal with credit card loans, auto loans, student loans?

Dr. WARREN: Well, credit loans, you know where I came from on this. I want you to know more about the terms. Well, you know, it couldn't have been a surprise if you ask me to chair this committee what is was that I was going to ask about. But I want to draw a line under another one that's really got me worried and - under two more. Auto loans. If we're not making auto loans, not only does it mean families can't get what they need, small businesses can't get what they need, it also means that that entire industry that's already on its knees will be dealt a death blow. And it will be dealt a death blow not because of mistakes that Detroit made, but dealt a death blow because of mistakes in the financial institutions, and that would be a true tragedy.

I also want to mention, though, because you did mention in the oversight the student loans. You know, there are just so many different directions in which we talk about how this financial crisis is touching the lives of Americans. Student loans, much of that money has just dried up. There are young people who are stopping their educations. You know, we're - I just taught my last class for the term two days ago, and I'm going to leave you and go write my exam for that class. And there are a lot of students who are taking exams right now who are not sure if they can come back in January because they don't think they're going to have the money.

This is a frozen market that is freezing people's lives. And once again, we need a coherent strategy here. The whole notion that the way we're going to try to make sure that students have adequate money to be able to go to school is that we're going to funnel it through for-profit lenders - this is a place where the government could be thinking quite seriously about expanding its own direct loan program, which is much cheaper for the students than going through the for-profit lenders.

But the point is, it's a crisis. If we're going to worry about banks, we need to spend a little time worrying about students. We need to worry about the people who can't do productive things in their lives because they can't get access to the money they need.

GROSS: So one of the problems I know in credit cards is that just as in the subprime mortgages, where risky lenders were given rates that went up and ended up really high, I think the same thing happened with credit cards. There were teaser rates that got you in with a very low rate and then the rate would rise on you and you would be in this escalating debt cycle. Is that right, and do you think that people with credit card debt are facing the same kind of problem that people with mortgage debt are?

Dr. WARREN: I think the credit card debt problem is the next big crisis. What's starting to happen now is that people are seeing escalating rates, even those who didn't get teaser-rate credit cards are feeling a real squeeze. There are literally thousands of reports coming out now where people with good credit who've, you know, followed the terms of their credit cards are suddenly finding that their 9.9 percent interest credit cards have been bumped to 29.9 percent, not because they did anything wrong but because the credit card company has decided they need more revenues. After all, these are tough times, so pay up.

Credit card companies are cutting lines of credit in half. So think of it this way. If you're one of the 50 million American families who can't pay off your credit card bill in full, that is, you're rolling it from month to month. And let's just say you have a balance - an average balance tends to be about $5,000 and you've got a $10,000 line of credit - so you get a note from your credit card company that just tells you that your line of credit has been cut from 10,000 to 5,000. Well, what may happen is within the blink of an eye you're now over limit, which means your interest rate goes up, which means you pay an additional $29, $35, $45-fee and so on.

GROSS: Now, in terms of asking the questions regarding whether the money in the bailout program is used - being used to unfreeze credit markets and to loan money to consumers, the General Accounting Office, which is also trying to monitor what's going on, they found that the Treasury Department doesn't have the tools in place to make sure banks that are getting money are lending it to consumers and small businesses. So that must be pretty discouraging to you.

Dr. WARREN: I tell you, the folks at GAO, bless their hearts, they put out this incredibly detailed, incredibly careful, incredibly moderately written report that says the Treasury's handing out money with no real controls on it. And let's be clear. It's not just how the money is going to be used. It's without conflict-of-interest checks in place. It's without the basic mechanisms just to track, you know, who you hire to help distribute the money, what are their interests here. And GAO is asking for some real - just operational accountability, not at the big questions that we're trying to ask in the Congressional Oversight Panel about whether or not it makes sense to put money over here instead of over there, and whether or not Treasury has an overall strategy for how they're trying to right the American economy.

COP, the Congressional Oversight Panel, is trying to ask those kind of questions. GAO is just asking the operational questions. When you take the money and you're supposed to put it over here, do you really have mechanisms in place? Are you really tracking this? And their report is just, in my view, a scathing indictment of the Treasury Department.

GROSS: My guest is Elizabeth Warren, chair of the new Congressional Oversight Panel created to monitor the $700 billion financial bailout and assess its impact on the economy. We'll talk more after a break. This is Fresh Air.

(Soundbite of music)

GROSS: My guest is Elizabeth Warren. She's chair of the new Congressional Oversight Panel to oversee implementation of the financial bailout program. She's also a Harvard law professor and an expert in credit law.

One of the questions you're asking in your report is how is the Treasury deciding who gets the money in the bailout program. Do you feel like there - that question hasn't been answered yet?

Dr. WARREN: Well, it's been answered in one sense, but it's a very troubling answer. What Treasury has told us is in effect there are three kinds of banks out there. There are healthy banks who just don't want the money, so they're in one bucket and they don't get any money. If you don't apply for it, you don't get it. And then there are failing banks who would like to have the money, but, says Treasury, we're looking over their finances and because they're failing we won't give it to them. And then there are banks in the middle that Treasury describes as healthy banks and says they can apply for the money. And if they apply for the money, they get it.

I mean, I don't know of a federal program where that's the only criteria for eligibility. Prove that you're a bank and prove that you're not broke. And if you can prove those two things, you just automatically get a percentage of taxpayer dollars. You're eligible now for $3 billion, or you know, 500 million, 8 billion, whatever your number is as a percentage of the size of your bank. And it's true across the board.

GROSS: Neel Kashkari, who's the Treasury Department's interim assistant secretary for financial stability, basically, he's the guy overseeing the bailout program from Treasury, and he said at the House Finance Committee meeting yesterday, he said, in defense of the bailout program, people often ask, how do we know our program is working? First, we did not allow the financial system to collapse. Second, the system is fundamentally more stable than it was. Did you find that convincing?

Dr. WARREN: Well, actually, let me even give you a little more drill down on what he's been saying. He's saying, in effect, he wants to use what are called general metrics. That is, the economy didn't collapse, look at a couple of things about what's happening with interest rate spreads, you know, some of the indicators. And it's like I - you know, it must be OK.

What we've really been pushing for in the Congressional Oversight Panel is to say, no, we want specific metrics. We want to be able to say, here's how you measure success. And at a minimum, if you can't do - look, it's hard to disaggregate because the Fed is in there moving, right, they're changing things at the same time. The auto industry is in its own kind of chaos. The housing market is continuing to collapse. So there's a lot going on, and it's hard to sort out that, you know, which action caused exactly which response.

But it is possible to watch where each of those $700 billion goes, to whom did it go, and from there, where did it go? You can't follow it forever but you can follow it on the first step out of the hands of the banks or out of the hands of AIG Insurance Company. Who actually got this money?

Did federal dollars make it back into lending or did your taxpayer dollars - were they used by a bank to acquire another bank or to make an investment in Europe or just to stuff full the vaults? Those are specific metrics you can follow, and I am unenthusiastic about the notion when Mr. Kashkari says, well, the economic didn't fail, therefore I must have succeeded. I just don't think that's a tight enough causation to give me comfort.

GROSS: You have an incredible job in front of you now trying to, you know, ask questions and investigate the federal bailout plan. How did you get the call that you were going - you know, asking you to be part of this congressional oversight committee?

Dr. WARREN: Well, I was - I didn't look for this. I mean, I understand there were some people who actually wanted this job. But I was having my law students over for a barbecue dinner - I do this for my 1L(ph)students every fall - and the folks were coming to deliver the ribs and the dirty rice and our dog was running around barking and the phone rang and I picked it up and the person on the other end said, Elizabeth? And I said, yes. And he said, this is Harry Reid. I want you to serve on the Congressional Oversight Panel. He spelled out the details for, you know, a couple of minutes, and then he said, so, will you do it? And I said, Senator, I'm honored. And he said, good, I'll take that for a yes.

(Soundbite of laughter)

GROSS: Were you going to say yes or were you going to just, like, deliberate for a while?

Dr. WARREN: Well, I said, um, uh, you know - just like I'm doing now, a kind of a stumble. And I said, well, Senator, I said, I have to talk to my dean. I actually have a real job. And he said, all right, but call me back. And so the next morning, I got into the office, I already had a call from Senator Reid's office. Have you officially said yes because we're issuing a press release.

(Soundbite of laughter)

No, I mean, they were very nice. They've been wonderful. They've been enormously supportive. But I have to say, I'm not sure that I fully appreciated the scope of this task until I began to get into it. We've only been at this a couple of weeks now. We've already met with the Treasury Department, with the inspector general of the Treasury Department, which is separate, with the GAO, with the Federal Reserve Bank. I've already read eight zillion reports and documents, gotten a lot of volunteer help, actually, and began to put together some staff. It's incredible what we're up against here.

GROSS: Before I let you go, because I know you really follow this stuff, though I realize you're kind of preoccupied now, are there are any Christmas shopping come-ons(ph) that you want to warn us about?

Dr. WARREN: Oh, actually, can I do something slightly different?

GROSS: Sure.

Dr. WARREN: Sign of the times, layaway. Are you old enough to remember layaway?

GROSS: Yep.

Dr. WARREN: Where people would buy things and they would put the money down and pay it off over time? Layaway has made a comeback this season because Americans recognize they simply can't take on more debt. And I say to that, hallelujah!

GROSS: So layaway, there's no interest? You just pay over time?

Dr. WARREN: No interest.

GROSS: And you're paying on the store directly as opposed to a credit card company.

Dr. WARREN: That's right, you pay the store. But more importantly, you got to pay for it before you get it rather than buy it and pay for it over the next 30 years.

GROSS: So you're not warning against layaway plans. You think that might be better than buying something on a credit card if you can't pay off the credit card every month?

Dr. WARREN: Hey, anything is better than buying something on a credit card if there's any doubt about whether or not you can pay that credit card bill in full next month. Happy holidays are holidays that have been paid for in cash before you start unwrapping the gifts.

GROSS: Well, Elizabeth Warren, I just want to say thank you and good luck.

Dr. WARREN: Thanks.

GROSS: Elizabeth Warren chairs the new Congressional Oversight Panel created to monitor the bailout and evaluate its impact on the economy. The panel released its first report yesterday. Warren is also a professor at Harvard Law School. You can download a podcast of the interview and find a link to the oversight panel's report on our Web site, freshair.npr.org.

Coming up, a new recording of a modern opera that has a score filled with waltzes, marches and chants. Lloyd Schwartz has a review after a break. This is Fresh Air.

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