Reuters reports on comments by Fannie Maes' CEO. "In response to a question about whether Fannie Mae had identified the major accounting issues with the most dollar-impact on its restatement, CEO Daniel Mudd said, 'Yes.' Mudd would not comment on when Fannie Mae might report 2005 results or return to regular quarterly reporting."

"Mudd said many external factors will also play into Fannie's restatement process, including a report expected soon from the company's regulator, the Office of Federal Housing Enterprise Oversight, on the company's problems. Fannie's CEO called the agency's examination 'quite comprehensive.'"

"He would not speculate about the report's contents. 'It's going to be very tough. It's going to be a bad day,' he said."

"Daniel Mudd told Reuters that Fannie Mae models suggest a couple of reset 'spike periods' in the next two years, based on past originations of mortgages with adjustable rates and other features such as low initial 'teaser rate' periods."

"It is still unclear what will happen to the housing market when these mortgages reset at higher rates, especially given some of the weakening in certain housing markets, such as vacation areas with a lot of investment buyers. 'If jobs are pretty stable, if home prices have come up underneath the mortgages to support them and if there's not any incidence of appraisal fraud, it could be just fine,' Mudd said."

"'If in certain geographies, some of those factors are different, there's some appraisal fraud, or there's an economic downturn or home prices have declined, it could be a very different scenario.'"

"'In that case, what you'd worry about, really on a neighborhood-by-neighborhood basis, is you have a foreclosure here and you have a foreclosure there and soon you've got four foreclosures on the market and you've got plywood on the windows and that could have a very deleterious effect,' on the market, Mudd said."

And Fortune touches on the former CEO. "Section 304 of Sarbanes-Oxley states that claw backs would occur in cases of 'misconduct' but fails to spell out what constitutes misconduct or specify whose misconduct qualifies. Some CEOs, like Fannie Mae's Franklin Raines, could still face claw backs, despite 304's shortcomings. Fannie's restatement is pending."