What We're Hearing

Perhaps someone at the Treasury Department and/or Federal Reserve woke up and realized that the nation's seven mortgage insurance firms cover the first 20% of losses on conventional loans held by Fannie Mae and Freddie Mac -- which means that if the MI industry goes south Uncle Sam has a 20% "loss coverage" problem on (potentially) $5 trillion of mortgages. Where am I going with this? MI stocks rallied a bit yesterday and some are up again today. For instance, The PMI Group was up 28% in trading today. On the surface 28% sounds quite impressive but when your stock sells for $1 (and once traded in the low $40s) it's not that big of a deal. But why are the MIs rallying the past two days? Could it be that Treasury might be coming to their aid in one fashion or another? Stay tuned…