What Is Driving The 'Unbanking Of America'?

DAVE DAVIES, HOST:

This is FRESH AIR. I'm Dave Davies, in for Terry Gross who's off this week. If you stroll through certain neighborhoods in big cities, you'll notice check-cashing centers, pawn shops and, in some states, payday lending stores. Our guest, Lisa Servon, says increasing numbers of working Americans are using those services and turning their backs on traditional banking because banks don't meet their needs and whack them with fees and charges they aren't expecting. In 2011, she notes, Americans paid $38 billion just in overdraft fees. Servon didn't just rely on data and interviews in her research. As you'll hear, she got jobs as tellers in a check-cashing center and a payday lending store to see the alternative banking world firsthand and talk to those who rely on it. Lisa Servon is a professor of city planning at the University of Pennsylvania. She's written on consumer financial services for The Wall Street Journal, The Atlantic online and The New Yorker online. Her new book is "The Unbanking Of America."

Well, Lisa Servon, welcome to FRESH AIR. You write about banking and its relationship with customers and how they've changed over the years. Take us back to the good old days decades ago, if they were good old days. How did banks used to relate to their customers?

LISA SERVON: Well, it's a good question. I mean, they were good old days, I think, for me and my family, not - certainly not for everyone. But I grew up in the '60s and '70s in a small town in New Jersey called South River. And every Saturday morning, my dad would go off to do his errands downtown. He would go to the barber shop to get his hair trimmed and pick up meat at Mike the Butcher's (ph), which was on my grandparent's corner, and go to the post office and then we would go to the bank. It was called Pulaski Savings and Loan. It's no longer that, which is part of my story. And, you know, all the tellers knew my dad. They knew me by sight. They would, you know, it was this halcyon, fuzzy picture of them reaching across the counter and giving me a lollipop. And so it felt like a community space where you would run into people from town and have small talk. And now, for my children, going to the bank means going to an ATM and pressing a few buttons where the money comes out. They don't see me pay bills for the most part. I usually do it at night in my pajamas, and there is no relationship. If we do go into the bank, I never know who the teller is and he or she doesn't know me.

DAVIES: It used to be a relationship of trust and...

SERVON: Exactly.

DAVIES: ...That personal relationship, that's all gone. Now, are fewer Americans actually banking these days, I mean, having accounts at traditional banks?

SERVON: Well, the number of savings accounts has dropped and checking accounts, too, to some extent. And we also see a rise in people using alternative financial services. Certainly, some people have switched from checking and savings accounts to just using prepaid debit cards. Some people are augmenting their use of banking services by going to check cashers and payday lenders and pawnshops. Some people have been pushed out of the banking system entirely, and a lot of the people that I worked with told me they simply can't afford it.

DAVIES: And there are plenty of people who have marginal credit or little income who...

SERVON: For sure.

DAVIES: ...Don't have bank accounts.

SERVON: That's right.

DAVIES: And there is this alternative banking system that you write about exemplified by check-cashing agencies that you often see in poor neighborhoods. How are they regarded by financial professionals, that whole world?

SERVON: Well, you know, I think most - certainly by consumer advocates and a lot of policymakers, they are thought of as being predatory, as being institutions that take advantage of customers and sort of take advantage of the fact that they don't have a lot of money. And, you know, there's this kind of attitude that if you don't use a bank account or if you don't only use a bank account, then you are somehow deficient in some way. And that didn't make a lot of sense to me when I thought about this whole problem. And, you know, my my own interest in it began when I started looking at these studies that the FDIC put out called their Survey of Unbanked and Underbanked Americans.

And, you know, at this point, they've been doing it for about 10 or a dozen years, and about 8 percent - it's been fairly consistent. About 8 percent of Americans don't have a bank account at all, and another 20 percent have a bank account but they also rely on these alternative financial services as well. And it struck me as not quite right that the assumption was that people were too ignorant to use them. I'd been doing research in low-income communities for my whole career, for 20 years, and from my experience, I knew that people who don't have a lot of money know where every penny goes. And so it struck me that there must be some better, deeper answer to that question of why so many people were not using banks.

DAVIES: Right. The assumption was people only go to check-cashing agencies who wish they could get a bank account.

SERVON: Or if - or that they don't know better. You know, if they were educated like me or if they lived in a middle-class area like me, then they would use it. And what I found out was that people were making oftentimes very rational decisions, and I also found out that it wasn't just low-income people in places like the South Bronx who were using alternative financial services. It was also people who own their homes, who have college degrees, who make $50,000 or $75,000 a year. And that was a huge surprise.

DAVIES: All right. Now, you didn't just learn about this from surveys. You got a job as a teller at a...

SERVON: I did.

DAVIES: ...Check-cashing agency in the South Bronx. How did this happen?

SERVON: Well, as I mentioned, I was looking at these surveys and this big data. And during the course of kind of scratching my head about that question of why so many people were not using bank accounts, I invited a guy who runs a chain of check cashers in the South Bronx in Harlem to one of my classes. And my students had read these articles about how awful these guys were and how they take advantage of low-income people and, you know, that - we were all practically salivating over, you know, getting...

DAVIES: This predatory monster.

SERVON: ...This guy to come into class and tell us what was going on. And Joe Coleman showed up - he's the person I'm referring to - was a very smart, interesting man who spoke very persuasively about why he believed his businesses were really serving the community. And it made a lot of sense. And so I was trying to really square Joe's story with the data, and it didn't add up, combined with my knowledge that, you know, my feeling and my experience that low-income people do make smart, economic decisions when they can.

And so I called Joe up and I said, I'm really interested in finding out more about this, and would you hire me as a teller? Because, you know, when you do policy research, you have to figure out what method best serves the question. And the question I was asking really required me to get as close to the problem as I could. I couldn't become a low-income person in the South Bronx, but the closest I could get would be to work behind the counter. And Joe was, to his credit, super open to allowing me to come in and gave me full access, and I worked for about four months as a teller at a check casher.

DAVIES: So what did you learn about why people use check-cashing services?

SERVON: It really came down to three reasons, and the first one was probably the most surprising. It was that so many people told me that they were saving money by going to the check casher. And the conventional wisdom is that people should not go to these businesses because they cost a lot of money. At RiteCheck, it cost 1.95 percent - almost 2 percent - of the face value of a check to cash it, $1.50 to send a bill, 89 cents to send a money order, which, frankly, is less than it costs at the post office. And so, you know, all those fees definitely add up. But what people told me was that they could predict those costs. The costs were obvious to them. And if they made one mistake at their bank, that resulted in an overdraft, it would easily be more than that - those costs. And those kinds of things, when you're living very close to the margin, they happen all the time - right? - overdrafting your account. Or, for example, what people found was that if they wanted to deposit a check on Thursday or Friday because they needed the money over the weekend, they wouldn't get it till Tuesday or Wednesday. And the benefit of having the money immediately far outweighed the cost of depositing it into the account for perhaps lesser fees but not getting it for several days. So cost was one of the reasons.

Transparency was the second. People, those costs that I just listed, they knew what they were. They were posted. It looked like - the store looked like a fast food restaurant without the greasy burger smell, right? You walk in, you see this menu, really, that spans the windows that lists all those fees, and there's no - nothing hidden. So a lot of times people would come in with their paycheck, I would cash it, give them their cash and then they would stand at the window with their bills. You know, their phone bill, their rent bill, maybe a credit card bill if they had a credit card, and they would stand there and figure out how much they could pay each bill that month or that pay period. And oftentimes, they weren't paying the bills in full, which was an insight I could get only by working at the window, not just by talking to people. And I would see, like, OK, that Con Ed bill they're going to pay, which is the electricity bill in New York City, it's going to get shut off if they don't pay a minimum of $50. The bill's $75, but they're going to pay $50 right now because that's what they have. They'd figure out that allocation and then whatever was left, that's what they had to live on until the next paycheck. And so that transparency was critical.

DAVIES: Did you find some of the customers were, to use a phrase refugees from the banking system, had come there because they used to have checking accounts and had bad experiences?

SERVON: For sure. So at both RiteCheck and Check Center where I worked as a payday lender later on, my research assistants and I did interviews with about 50 customers in each place where I kind of came out from around the window after doing the four months and said, like, OK you might recognize me from being back there, but I'm actually a researcher and I'm curious about how you manage your money. And I'd say about 50 percent of the people that we interviewed also had bank accounts and another chunk had had bank accounts in the past and no longer did. So most of the people that we talked to and that we served had direct experiences with the banking industry, with mainstream financial services.

DAVIES: You had one guy who was a contractor come in with - I think the check was for $5,000 he'd gotten on a job. And he paid the almost 2 percent charge, so it cost him $97.50...

SERVON: Yeah.

DAVIES: ...To get that check cashed. It would have been free from his bank...

SERVON: That's right.

DAVIES: ...If he'd had a banking account. Why would he come to a check-cashing place?

SERVON: Well, it's interesting that you ask because I asked the same question, and that really - experiences like that really showed me why I needed to be behind that window because even though I was working there and dealing with people every single day, I still, with my own biases and having grown up using mainstream financial services, didn't get that. And so it was one of my tellers who helped me understand it, and she said, you know, Carlos (ph) has this small construction firm. It's Thursday today when we're counting the check. He probably has to pay his guys tomorrow on Friday, and they're probably not documented or they don't have bank accounts, and he's got to pay him in cash. So if he deposits that $5,000 check at his account, he can't pay his guys tomorrow.

Or maybe he's just gotten another job, maybe at a local church or a business, to paint and put up sheetrock. Well, they want him to start immediately, and he'll lose that job if he can't take that money right now and go to the lumber yard and buy supplies. And so all of these things that may appear irrational to those of us who haven't walked in the shoes of the people who are using these services, most of them turned out to be pretty rational decisions.

DAVIES: Yeah. You have this stream of people that are coming in with routine transactions and day after day, week after week, this check-cashing outfit takes a cut of their stuff.

SERVON: That's right.

DAVIES: And some people look at that and say that's predatory.

SERVON: Right.

DAVIES: How did the customers regard the check-cashing agency?

SERVON: The people who came, our customers, really liked it. They were loyal. They felt like they got treated better than they got treated at the banks. And they often tipped us actually, which was really interesting. The first time it happened to me, I kept trying to shove this money back at the customer because I didn't know what he was doing. But it was a sign of this, you know, this kind of custom or practice of giving somebody a little something back for good service. So here you had mostly lower income folks who were actually saying, you know what? You gave me really good service and you treated me right, and so I'm going to give you a little bit something back. And for most of the tellers, they were maybe - most of the tellers that I knew actually had bank accounts. But there was this sense of community. You know, you help me out, I'll help you out. And so I didn't hear a single person at the check casher say they charge too much.

DAVIES: Or complain or get into an argument or...

SERVON: Nope, nope.

DAVIES: Lisa Servon's book is "The Unbanking Of America." We'll continue our conversation after a short break. This is FRESH AIR.

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DAVIES: This is FRESH AIR, and we're speaking with Lisa Servon. She's a professor of city planning at the University of Pennsylvania who has studied and written about financial services. She has a new book called "The Unbanking Of America: How The New Middle Class Survives." We were talking about your experiences at a check-cashing place that you worked at in the South Bronx and how so many people, not all of them poor, found it a useful financial service and in some ways better for them than banks. Let's talk a little bit about how banks have changed. Compare how they used to make money from how they've come to make money.

SERVON: So, you know, in the '50s, '60s, '70s, banks were mostly making their money from interest, from small loans and things like that, and from their depositors, from people who held accounts like my parents did and like I did. And they didn't make a ton of money. I mean, we lived across the street from the guy who ran Pulaski Savings and Loan, and they certainly seemed wealthier than we did, but they lived on the same block, and my parents were both teachers. So there wasn't this sense of huge income inequality between people in the finance sector and everybody else like there is now. And that was known as the 363 era of banking, which I think is super funny. So you would get 3 percent on your savings account, you'd pay 6 percent on a loan and bankers were allowed to leave at 3 to go to the golf course, right?

DAVIES: OK.

SERVON: That's not the same. Mr. Konopacki (ph), who lived across the street, was home by 5:15 every night for dinner. So there was, you know, it was a regular job. And I almost liken it to the two people I met who run the payday chain and the check-cashing chain because it's almost like having a small chain of dry cleaners or something. They're local businessmen, and that's what it used to be. Pulaski didn't have any branches, and that was typical. So a couple...

DAVIES: So what changed?

SERVON: So what changed? Well, in the '70s and '80s, deregulation happened, for one thing. So what that meant was that a lot of banks were able to do things that they hadn't been able to do before in order to make money. Just following the Depression we passed a law called Glass-Steagall that prohibited banks, because of the financial crisis at that time, prohibited banks from engaging in commercial banking, retail banking and investment banking. It kept those things separate. And some people may remember that Glass-Steagall was invoked in the early part of the latest presidential campaign - we need to put it back - because Glass-Steagall was basically repealed and banks were once again able to do more things.

And the world was a more complicated place. So they were losing money on interest because interest rates had gone a little bit nutty. They were able to merge with each other and branch. They were able to merge with insurance companies and other kinds of financial institutions. So that meant that they got really big. And although it's not a complete causal relationship, when they got big, they moved farther away from their customers and they found other ways to make money. And one of the things that they did was discover fees. And bankers never liked giving overdraft protection. It was something that they would do for their more well-heeled customers, but they saw it as an inconvenience.

DAVIES: Well, back then, if you had an overdraft, what would happen to you?

SERVON: You know, they would tell you about it. You'd go to the banker and tell them what happened. And they would just, you know, deal with it. But you wouldn't get charged $30 every time it happened or another $30 if you hadn't rectified the situation in five days. So it was a very different story. It had to do with that relationship that we talked about.

And so banks realized, with the help of some interesting consultants who kind of walked around and said, look, if you just tweak these numbers in your computer system, you can actually make a whole lot of money. And so, you know, I think the last year that I remember seeing data for it was about $38 billion in overdraft fees in the last year. That's a lot of money.

DAVIES: So when you said they offered overdraft protection...

SERVON: Yep.

DAVIES: ...I mean, that sounds like a benefit. Is it?

SERVON: Well, it's not. And, you know, what the thing is, is that I think a lot of these kinds of things that consumers have been, quote, unquote, "offered" as part of their bank accounts in the last 20 years or so, maybe even initially, they seemed like a good idea. But they were kind of twisted in a way that resulted in banks essentially tricking people. And I had lots of people who I talked to in D.C., where I did a lot of research, say, yeah, banking became about tricking people and figuring out how to manipulate and deceive them.

And, you know, the fact is that that's what the free market is set up for. And so the changing policy, the ability to merge, the ability to grow, the ability to make money in other ways opened doors for banks to make a lot more money in other ways and not care about their customers as much as they used to.

DAVIES: So the overdraft protection meant that if you wrote a check you couldn't cover to your electric company, they would pay the electric company.

SERVON: That's right.

DAVIES: They would pay the overdraft, but they would hit you with a fee.

SERVON: That's right.

DAVIES: How much of - how big were the fees?

SERVON: Well, at this point, it's more than $30 for most banks - $27 to $35. And those fees have been growing. And the amount that banks make off of them - they're very dependent on those fees, now. And they make most of them, also, from lower-income customers who can't afford to keep a minimum balance in their account. So it's the overdraft fees, it's also monthly service fees.

DAVIES: Right, so they're giving you service charges that didn't used to exist...

SERVON: That's right.

DAVIES: ...Big penalties if you have an overdraft...

SERVON: Right.

DAVIES: And then you talk about something called debt resequencing. Do I have that right?

SERVON: Debit resequencing.

DAVIES: Yeah, explain that.

SERVON: Yeah. Yeah, so this is a really amazing practice. What banks will do - and I think - and many, many of them still do this even though the light's been shined on it and shown to be a rather unethical practice - is that if you have, say, $100 in your account and you have a few checks that you've written - one for $75 and one for $125 and one for $25, the bank will look at those three charges that are going to hit your account, and it will order them in a way to maximize the overdraft fees.

DAVIES: So the checks are coming in on the same day, and they...

SERVON: The checks - yeah. So if they put the 25 one first, that would clear. And then you'd be paying two overdraft fees, right? Because the other two checks would put you over the limit. But if they want to maximize their overdraft fees, they'll put that 125 one first. And then they'll get three overdraft fees instead. So the computer programs that run the account, the analytics, are set up in order to get the most money from you as possible. That doesn't seem, to me, like serving your customers, your loyal customers, very well.

DAVIES: I've always thought of banking as being a heavily regulated industry. Is it?

SERVON: You know, it's really - it's very heavily regulated in some ways. There were four federal agencies regulating the banking industry until the Consumer Financial Protection Bureau was created in 2009. So now there are five. Most of those agencies don't really know what each other is doing.

DAVIES: Have the regulations, since the crash, made things better for customers?

SERVON: I think the Dodd-Frank definitely has and in particular the CFPB, the Consumer Financial Protections Bureau. It is the only one of those five agencies that's sole purpose is to protect consumers. And it is the only one of those agencies that can regulate the entire spectrum of financial services institutions from check cashers and payday lenders to banks.

So the Wells Fargo scandal that we saw just a few months ago, where Wells Fargo was opening accounts without customers' permission, the CFPB is on top of that. They've saved billions of dollars for consumers. And I'm - frankly, I'm concerned, with the change in administration that's coming, that the CFPB will be rendered ineffective. And that would be a real loss.

DAVIES: So there - some of these outright deceptive practices have been attacked.

SERVON: They've been curtailed, yeah.

DAVIES: But still high fees? Still managing...

SERVON: Yep.

DAVIES: ...The transactions to maximize revenue for the bank?

SERVON: Yes.

DAVIES: Lisa Servon's book is "The Unbanking Of America." After a break, we'll hear about her experiences working at a payday lending center in Oakland, and we'll remember writer Nat Hentoff, who died last Saturday.

I'm Dave Davies, and this is FRESH AIR.

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DAVIES: This is FRESH AIR. I'm Dave Davies in for Terry Gross, who's off this week. We're speaking with University of Pennsylvania Professor Lisa Servon who writes about financial services and says, growing numbers of Americans are giving up on having bank accounts and relying instead on alternative services such as prepaid debit cards, check-cashing centers and payday lenders. Her new book is "The Unbanking Of America."

Well, another part of the alternative financial services world that people go to, who don't have traditional banking, is payday loans, payday lending. Explain how that works.

SERVON: Payday loans are very short term, usually two weeks to a month, small meaning $75 to $300 usually. High-cost loans - the APR, the annual percentage rate ranges from three to 600 percent. So the way it works - the reason it's called a payday loan is that if you want one, you have to have a job or a regular source of income - it could be a social security check - and you have to have a bank account. So you show up at the lender, you show them that - proof of those - the two things and your repayment of that loan is due on your next - the date of your next paycheck or government check. And so it's a - it's basically an advance of your pay day, your payroll.

DAVIES: And the pay day - you have to sign something which gives the payday lender access to your account.

SERVON: Exactly.

DAVIES: I mean, it's not - you have no discretion...

SERVON: That's right.

DAVIES: It pops out of your account.

SERVON: That's right.

DAVIES: The day of your pay day...

SERVON: Yes.

DAVIES: ...That's the payday loan, right?

SERVON: Exactly, exactly.

DAVIES: And then you pay what's called a fee...

SERVON: Yes.

DAVIES: ...Which could be 25 or 50 dollars, but on an annual percentage rate basis it could be 500 percent.

SERVON: That's right.

DAVIES: You got a job at a payday lender.

SERVON: I did (laughter). I did. You know, this whole book was...

DAVIES: You have a way of doing this (laughter).

SERVON: It was a - it was like a quest, you know? I would sort of go and do one thing and then I thought like, wow, if I really want to understand this, then I have to do this, too. And payday loans are probably the hottest topic in this world. Most people know in this kind of alternative financial services world - most people know something about them and assume that they're horrible. And once again, I felt like, well, first of all, I thought I can't write about this unless I understand the way that industry works. And, again, why are people doing it? Why would people take out such an expensive loan if it's harmful? Which is what the received wisdom is - these are harmful loans.

DAVIES: So a payday lender knowing that they are widely condemned by consumer groups allowed you, this professor, to come in and work behind the counter.

SERVON: Yeah. It's funny because I think in the case of both businesses, they have been beaten up so badly that they had nothing to lose. Right? So I thought nobody's ever going to let me come and work there, but they thought, sure, come on in. You can't say anything worse than what's been said already, so yeah.

DAVIES: So your second turn behind the Plexiglas window (laughter).

SERVON: Yes, yes in Oakland, Calif.

DAVIES: Tell us what it was like.

SERVON: It was, again, super interesting. I saw the relationship between the people behind the counter and the customers. And, in fact, just yesterday, I talked to a teller that I write about in the book, Arianne (ph), and she said, yeah, you'd recognize all the customers. They're all still here, you know, three years later. You know, I would say a slightly - somewhat better off group of people. These are people who have to have a job and a bank account already. But, similarly, were oftentimes in a moment of crisis. They really needed a small amount of money right away for an urgent need.

DAVIES: All right, so you're in a jam.

SERVON: Yeah.

DAVIES: This is a way to get it. The problem is what if you can't really afford to pay it back quickly?

SERVON: Right, and that is a problem. So what happens for many people - and this is where most people, including myself, have a problem with the industry - is that if that two weeks comes up and you can't pay, you end up doing something called a rollover. You end up maybe paying back the loan, but getting a new loan out right away and paying a new set of fees. So if you paid $15 per hundred to borrow the money in the first place, now you're paying another $15 really for the same hundred dollars. And that often happens. People are often in a situation where it's not a short-term need. Right? It was an immediate need, but it wasn't a short-term need, and they can't pay it off.

DAVIES: Right. You write of someone who had two different jobs. She had kids. Her car broke down.

SERVON: Yeah.

DAVIES: She had to have that car to keep the two jobs.

SERVON: That's right. So many people are in that situation where it's an impossible choice. Do I fix my car so I can keep my job or do I take out this loan and take out a loan that I know I can't afford? Or do I lose my job? Do I take out a payday loan to feed my kids or do I not feed them? Right? So these are choices that I think many of the people that judge these lenders and the people who use them don't have to face. I've never faced a choice like that.

You know, even if I hit rock bottom, I'd have family and friends who would loan me a couple hundred dollars. But more than half the people in this country could not come up with $2,000 in the event of an emergency. And that's not just from their own pockets or assets. It's from their extended network. So this is a big problem, and it's not just affecting low-income people.

DAVIES: And the criticism of it is that payday lenders present themselves as people who help people out who are in a temporary jam. They provide something that no bank or anybody else will provide...

SERVON: Right.

DAVIES: ...But that the real business model is to keep them on the hook...

SERVON: Yeah.

DAVIES: ...So that those fees pile up week after week, month after month and then you really are paying three or four or 500 percent interest.

SERVON: That's right. And I think that's the crux of the issue is that people are not necessarily using the loans the way that they're sold. Right? If it's sold as a two-week loan, but you're keeping it out for three months or four months, then there's a difference between, you know, what the product is being sold to do and how people are using it. And that's obviously a problem. The real question is if you don't have any other options or choices, is it better to take out that loan even at the high cost that it is or not take it out at all? And so many of the people that I talked to and interviewed said I'm glad that that money was there for me.

DAVIES: Do you have any advice for someone who, you know, doesn't have a lot of money and is going to be, you know, living close to the edge a lot of the time - if they want to get a bank, what should they look for?

SERVON: Yeah. Well, for one thing, credit unions are a great option for people if you have access to one. Credit unions are cooperatives. Their first goal is not about maximizing profit for shareholders because as an account holder, you are an owner of the cooperative. So there are sites where you can check and see if there's a credit union that you could belong to. And on average, people who have credit union accounts pay a lot less in fees than people who have mainstream bank accounts.

I actually have a button on my website that says - it's called called how to leave your bank, so people can go to that. And there are a few really good resources where you can say, you know, if what you need is a no-cost checking account, it'll help you compare options so that you can figure out who's offering the product that you want, who's most transparent, who has the best ratings among customers.

And so I think oftentimes it's a local bank, a community bank or a credit union that's your best bet. And contrary to popular belief, you don't need to go to the bank that has the most ATMs. A lot of these smaller banks are now reimbursing people if you have to pay an out-of-network fee to use another ATM, they'll put that money right back in your account.

DAVIES: And can you look at the terms and conditions that they give you and make sense of them? I mean, does it make sense to really do your own research?

SERVON: It does. Some of the sites I'm talking about - one is called NerdWallet, for example - is a great site that does that work for you. Right? So they're looking at those 44-page disclosure agreements that you get with their - your checking account and figuring out how to make those terms more transparent to people who want to compare options and putting them in a table so that you don't have to do that work yourself.

DAVIES: Are there things that the government can and should do to help us get financial services that are more responsible?

SERVON: I think so. I mean, just to follow up on that transparency point, you know, government could mandate that banks become more transparent. And I think banks' answer to that push for transparency has sometimes been to issue these disclosure agreements that can be 40 pages, 50, 200 pages that nobody can read.

In the book, I actually advocate for a financial facts box that would be on the side of every consumer financial product the same way there's a nutrition facts box on your orange juice and your pasta and your - on your cereal that says - that allows you to compare this checking account to that checking account, this payday loan to that one, this debit card to that one so that people can really look side by side and say like, oh, this one is not going to cost me as much or given my particular situation. I also think that government could rate every financial services provider. You know, in some cities - I live in New York - there are big, blue letters in the window of every restaurant. If you get an A, it means your kitchen...

DAVIES: From the Health Department.

SERVON: ...From the Health Department - your kitchen passed inspection with flying colors. I don't order Thai food from the restaurants that have B's and C's in my neighborhood because I don't know what's going on in those kitchens, and I don't have to check the Department of Health's website anymore. That letter grade is right in the window. Why don't we have letters like that or gold stars or something in the window of every check casher and bank? I think those are two great things.

The other thing I think is that in terms of regulation, the government banking relationship has shifted way too far to the side of favoring banks as opposed to favoring the public interest. You know, the fact is that good, safe, affordable financial services are really essential to everyone to operate fully in the economy and in civil society. And banks are in the business of maximizing profit. They're not in the business of financial health.

DAVIES: Lisa Servon, thanks so much for speaking with us.

SERVON: Thank you. It's been a pleasure.

DAVIES: Lisa Servon is a professor of city planning at the University of Pennsylvania. Her new book is "The Unbanking Of America: How The New Middle Class Survives." Coming up, we remember jazz critic and First Amendment advocate Nat Hentoff who died on Saturday. This is FRESH AIR.

DAVE DAVIES, HOST:

This is FRESH AIR. Nat Hentoff, the author, jazz critic and outspoken advocate of free speech, died Saturday at his home in Manhattan. He was 91. Hentoff wrote mostly about jazz in the '50s and '60s and produced recordings by many great musicians, including Charles Mingus and Pee Wee Russell. In 1958, Hentoff began writing for The Village Voice, a relationship that would last for 50 years. His writing moved from jazz to politics, education and other topics. He was a staunch free speech advocate, an independent thinker whose stance sometimes surprised liberal communities. He opposed capital punishment, but many feminists were shocked when he wrote in opposition to abortion. Hentoff also wrote for The New Yorker and The Washington Post. Terry interviewed Nat Hentoff in 1986 when his memoir, "Boston Boy," was published.

(SOUNDBITE OF ARCHIVED BROADCAST)

TERRY GROSS, HOST:

You grew up in a predominantly Jewish neighborhood. And your parents seemed to really try to instill in you a sense of us and them, the Jewish people and everybody else, and everybody else you weren't supposed to really be friends with or hang out with.

NAT HENTOFF: Well, that was mostly my mother. My father was a traveling salesman, and before that, he had been in the Army. But he was fairly urbane. He went to all kinds of cities. He traveled in the South and all through New England, and he had less of a sense than my mother that all gentiles were anti-Semitic and that therefore they were to be kept away from. My mother, though, did believe, as many men and women in that neighborhood, that anti-Semitism was as close as the first gentile you met in the first hour of the day went out on the street. They weren't entirely wrong in Boston at the time because it turned out to be the most anti-Semitic city in the country. But they did feel that part of their mission as parents was to protect their young, as all parents feel, from hurt, from harm. And the way to do that, they felt, was to instill in the young a profound suspicion of gentiles - you can never trust them, my mother would say - and to instill the sense that your only protection was solidarity with other Jews.

GROSS: How did you react to that? Is that something you tried to follow in your early years?

HENTOFF: No because I was a reader. I was an obsessive reader. To me, one of the great pleasures of the week was going to the public library and trying to con the librarian into letting me take out more than the two books I was allowed. And so I knew from reading that this insularity, first of all, was not unique to Jews. It happened everywhere else. And it didn't work, and it didn't make any sense that if you were to make your way in the world, in a sense you had to view everybody with suspicion until he or she proved himself or herself. But to lock yourself into that kind of self-encapsulation was to deprive yourself of something - you never knew what you were depriving yourself of because you never let yourself get to know anybody except Jews.

GROSS: You got interested in jazz at a pretty young age. What was your first attraction to it, and what really spoke to you about the music when you heard it?

HENTOFF: Well, it goes back to when I was much younger than when I started being interested in jazz. We had to go to the synagogue from the time we could walk, not all the time but for the holiest of, you know, the Rosh Hashanah, New Year's, Yom Kippur. And I was just struck by the singing, the cantor, the hazzan. He is an improviser. It's really like Jewish blues, and it's usually a man who has considerable virtuoso as a performer who is basing his work on centuries-old traditions of liturgical music but has to tell his own story like a jazz musician, otherwise it doesn't work. And the music is, in turn, defiant, ecstatic, lyrical, terribly sad, joyous. It's powerful stuff.

And I didn't hear anything like that aside from the synagogue until I was about 11 years old walking down Washington Street, which is the main business street of Boston or was then, and coming out of the public address system of a record store, it sounded like 15 hazzans except they were all playing instruments. They weren't singing - a hazzan on a trombone, a hazzan on a trumpet. And it turned out to be - I wish I could say in tribute to my taste at the time that this was Duke Ellington's band or Count Basie's band, but no, it was Artie Shaw's "Nightmare," which is OK because I always thought Artie Shaw was underrated. And I rushed in. I had to know what the record was and I bought the record even though I didn't have a record player, I didn't want to let it get away from me.

GROSS: You took clarinet lessons when you were young. Did you want to be a jazz musician?

HENTOFF: I was disabused of any possibility that I could be a decent jazz musician when I was about 14 years old. I was practicing the clarinet by an open window, and I heard a crude, curt shout from below, hey, kid. And I looked down and there is a very short person of about 12 years old. You want to go to a session? Apparently, he was missing a clarinet player. So I went to the session, and I could read the charts pretty much. I could not improvise. This guy - this 12 year old difficult person as he has been all of his life says - picked up his horn, and it was the most beautiful, lyrical, flowing, totally improvised music I had heard outside of Louis Armstrong on the real, you know, classics. His name was Ruby Braff Now, Ruby taught me right away that I wasn't going to be a jazz musician.

GROSS: Did you start hanging out in clubs when you were still under age?

HENTOFF: Oh, yeah. I - when I was about 14. Fortunately, I had the kind of Richard Nixon beard even then so that people thought I was older, and I would go to Sunday jam sessions at a place called the Ken Club, and that's where I first heard Sidney Bechet, and Wild Bill Davidson and people like that. And then once I was in radio at the age of 19 or before that actually, I made my home a place called the Savoy. It was a club just over the - at Symphony Hall in Boston there was a bridge maybe half a block after that, and it is sort of the dividing line between the black section of town and the white section of town. And the Savoy was just over that bridge, and that's where I learned so much about music and more to the point talking to the musicians between sets after hours.

GROSS: You actually became very friendly with a lot of musicians...

HENTOFF: Oh, yeah. Right.

GROSS: ...Especially like before you were professionally writing about music.

HENTOFF: Oh, sure. Well, some of them like Rex Stewart and Ben Webster and to some extent Duke Ellington sort of took me on as a foster son. That is I was obviously interested, I was obviously terribly impressed by them, and they took the time - and I was very grateful for that - to talk to me not only about music but other things as well. I mean, after all, these are people who had traveled not only all over the United States, but all over Europe.

And being outsiders anywhere, including the United States because they were black, they were very trenchant observers. And to hear Rex Stewart talk politics was really to listen to an expert of a much, much sharper, I must say, than Walter Lippmann, who was - whom I was reading at the time.

GROSS: When you started writing about jazz as a journalist and as a critic, was it hard to write about people who you already felt such admiration for? You were in awe of them, you'd become friends with some of them...

HENTOFF: Yeah.

GROSS: ...But, suddenly, you were in a different position. You were reporting on them and you were reviewing their work. Was it a difficult transition to make?

HENTOFF: It was only difficult when I didn't like their work.

GROSS: Well, I'd imagine that would be terrible.

HENTOFF: Yeah. I never had that problem with Duke because I really - he - I just never found anything by Duke that wasn't very interesting, although there were gradations. The one time where that turned out to be most unfortunate, the problem one has as a critic when you're reviewing something by a friend, the smartest thing, of course, is to not review it. I wasn't smart.

Paul Desmond was my closest friend. He was the eldest saxophonist with Dave Brubeck. He was the guy who brought some music to that otherwise clanging, old railroad car that was called the Dave Brubeck Quartet. And Paul and I really were very close. We had the same tastes and obsessions, and he put out a record once. I was doing all - practically all of the jazz record reviewing at the time for DownBeat, and it was just not a good record. I don't know who talked him into it, but it was sort of like good housekeeping jazz, the kind of jazz that anybody would like and not remember.

And I thought about it, and I said I can't lie about it because that's not fair to the people who use these reviews to buy records. What I should have done is to give it to somebody else. What I did do was to give it the same treatment I would give the record of anybody else who made that kind of record, and I slammed it. And that was the end of the friendship. I regret that very much.

GROSS: Did that kind of problem persist where it was hard to write critically about someone whose work you basically admired and who you felt some friendship with?

HENTOFF: No, I never - the other times that that came up, the other musicians would be ironic and sardonic, but it never ended the friendship. Like, Horace Silver once said to me, so I'm an angular pianist. Would you play that for me?

DAVIES: Nat Hentoff speaking with Terry Gross recorded in 1986. We'll hear more after a break. This is FRESH AIR.

(SOUNDBITE OF LAURENT COQ SONG, "LA MAGA")

DAVIES: This is FRESH AIR. We're listening to Terry's interview recorded in 1986 with author, jazz critic and First Amendment advocate Nat Hentoff. He died on Saturday.

(SOUNDBITE OF ARCHIVED BROADCAST)

GROSS: I think that some artists think of critics as being parasites, that they don't make the art, they just write about it and criticize it.

HENTOFF: Well, I - that's one of the reasons I was delighted to finally stop being a critic. I had some of that feeling.

GROSS: You felt that way?

HENTOFF: Yeah, yeah. I was proud of not the record reviews or the performance reviews because some of those were real tough and probably caused somebody some jobs. And even though I felt I was listening with as much - objectivity is impossible there, but with as much, and let's say, informed subjectivity as possible, I didn't feel good about it. I did feel very good about the long interviews I did with Lester Young, with Duke, with a whole lot of people because they had now become, some of them, part of history.

When I finally stopped being a full-time critic, I still kept writing about music. But ever since, I do not review records I don't like. I only write about records I'm trying to convince other people to get. And it's a much better feeling, makes life more pleasant with my daughter, too, because she's a professional musician. And she used to say, how dare you, how dare you say this about somebody when you can't even tell a C chord from I don't know what. And I would say, musicians can be lousy critics, too. It's not that - that's not the question. But anyway, I'm much more comfortable not getting in the way of other people's living.

GROSS: But that was an interesting point your daughter raised because you never wrote C chord kind of criticism anyways.

HENTOFF: No, no.

GROSS: I mean, you didn't approach it from a technical view.

HENTOFF: But I got a good lesson - I got a good lesson once. Gunther Schuller and I used to do a series for public radio at the time, and he thought that Oscar Peterson was the most extraordinary pianist that had ever been in any form of music. And I thought - well, I'll tell you what I thought in terms of a story Duke Ellington figures in. Marian McPartland, another pianist, had been in the United States only six months, and she was playing at a place in New York called the Hickory House, and that was the place where Duke, one of the few nights when he was off the road, would come in and have dinner. And he heard her first set, and she came off the stand and Duke gave her his characteristic large smile and said, my, my, my, you play so many notes. And Marian said six months went by before I realized - because I was green as grass - that he was saying, all you play is notes. There is no music there.

Now, Peterson, to me, is a perfect example of this. Except rare occasions, he is all over the keyboard. He can do anything, so he never bothers to leave anything out, by contrast, let's say, with Count Basie. But Schuller was saying that because he's a musician with fine ears in terms of technique that this was a great musician. I knew better. Even though I couldn't tell a C chord from a I don't know what, I knew better.

GROSS: You eventually started producing records as well, and you've produced records by Charles Mingus and Cecil Taylor, Pee Wee Russell just to name a few. Did that put you in an uncomfortable situation? And what I'm thinking is that a lot of jazz musicians have become so accustomed to being treated badly and to being ripped off financially from record companies that they might have been suspicious of you in that record producer capacity. Did it put you in an uncomfortable position?

HENTOFF: No because we had a set up under Archie Bleyer. Archie was the guy who ran Cadence Records and had had a lot of hits at the time. And I ran the jazz label, which was called Candid, with Bob Altshuler who was an old-time jazz afficionado. He was well known to the musicians too and our - you know, there was no attempt to - here's the contract, take it to your lawyer before you sign it, that sort of stuff. No. I didn't have any problem with that. You know why? Because I knew I was straight. And if you know that, there's no problem. But I enjoyed that experience a lot because, first of all, I was giving work to musicians. More personally, that's a record collectors dream to be able to say I want this fellow, this fellow, this fellow, let's all go into the studio and play. It was the least difficult job I've ever had because once I had asked a leader to take over, he was the leader. And I had nothing to do really except order sandwiches and keep time on the various takes. Once in a great while, they'd get stuck on a number. They just couldn't make it work. So then my job would be - and this is hardly profound A&R work, but it was pretty effective - I'd go down and say to the leader, well, why don't we play a blues? And that always worked, never failed (laughter).

DAVIES: Nat Hentoff, speaking with Terry Gross in 1986. Hentoff died Saturday. He was 91. On tomorrow's show...

JOE BUCK: When kids would say, Mr. Buck, how do I get into broadcasting? Start smoking.

DAVIES: Joe Buck didn't follow this advice his dad, Hall of Fame announcer Jack Buck, gave to other kids. But Joe did go on to become an Emmy Award-winning sportscaster himself. He has a new memoir. We'll talk about his good luck, his childhood and why he gets so much grief from some fans. Join us. FRESH AIR's executive producer is Danny Miller. Our interviews and reviews are produced and edited by Amy Salit, Phyllis Myers, Roberta Shorrock, Ann Marie Baldonado, Sam Briger, Lauren Krenzel, John Sheehan, Heidi Saman and Mooj Zadie. Therese Madden directed today's show. For Terry Gross, I'm Dave Davies. We'll close with music from Charles Mingus from a session produced in 1960 by Nat Hentoff.

(SOUNDBITE OF CHARLES MINGUS' "WRAP YOUR TROUBLES IN DREAMS")

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