In the fall of 2007, when the U.S. economy first seemed in peril, I began answering reader queries here on the Business Desk. I still do so occasionally, but this page has expanded to include posts from eminent economists, "far-flung correspondents," and a variety of voices that have intriguing and/or useful things to say about economics, broadly defined. Please feel encouraged to respond to any and all of them.
Question: Banks like Wells Fargo and JP Morgan recently announced better-than-expected profits. The given reason is that they are making money on the refinancing of mortgages. Doesn't mortgage refinancing imply lower rates of interest and repayment? How can they be making MORE money on these loans?
Paul Solman: They don't hold onto the mortgages, remember. They package and sell them. They make much of their money on the fees that derive from the packaging and selling. If there's a flood of such business, they make more than if there's a trickle.