When the dot-com bubble was followed by the shock of 9/11, the Fed dropped interest rates to 1 percent. As Alan Greenspan clearly intended, this unleashed a scramble among borrowers to refinance as many long-term mortgages as possible at lower rates. This was painful from the point of view of the original lenders. But it triggered an immediate wave of consumer spending, and for the mortgage industry it generated a huge surge in fees.
