CNBC.com

WHEN: Tuesday, July 15th at 4PM ET
WHERE: CNBC's "Closing Bell"

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Daniel Mudd, President & CEO of Fannie Mae, on CNBC's "Closing Bell."

All references must be sourced to CNBC.





Melissa Lee: AND THE SCC ANNOUNCED IT WOULD TAKE ACTION TO LIMIT SHORT SELLING OF THOSE SHARES. NOW AN EXCLUSIVE TO TALK ABOUT THE TODAY'S MOVE. WE ARE JOINED FROM FANNIE MAE HEADQUARTERS WITH CEO, DANIEL MUDD.

Daniel Mudd: IT'S GOOD TO BE HERE, THANKS.

Lee: AND WE WANT TO TALK ABOUT THE EMERGENCY ORDER, EMERGENCY MEASURE IN ORDER TO LIMIT NAKED SHORT SELLING ACTIVITY IN YOUR STOCK. IS THAT WHAT IS TAKING YOUR STOCK DOWN AT THIS POINT?

Mudd: NO. I THINK THAT WE ARE THE LARGEST PARTICIPANT IN THE HOME MORTGAGE MARKET, AND THE MARKET IS GOING THROUGH A TOUGH PATCH HERE. I THINK THAT'S FUNDAMENTAL. AND CHAIRMAN COX'S MEASURE WILL BE POSITIVE FOR THE MARKET.

Lee: IS THAT SOMETHING THAT YOU ASKED FOR?

Mudd: NO.

Lee: IT IS NOT? DO YOU HAVE ANY EVIDENCE THAT IT IS NAKED SHORTS THAT ARE PUTTING DOWNWARD PRESSURE ON YOUR STOCK?

Mudd: I THINK IT'S HARD TO READ THROUGH. IT'S A CHOPPY MARKET WITH A LOT OF FOLKS ON VARIOUS SIDES, LOOKING FOR CLIR TEA AND LOOKING FOR DIRECTION. I THINK THOSE PIECES ARE STARTING TO EMERGE NOW. AND WE ARE LOOKING FOR POSITIVE STATEMENTS. AND WE APPRECIATE CHAIRMAN COX, AND DIRECTOR LOCKHART. I THINK THAT'S STARTING TO PUT A FLOOR UNDERNEATH THE MARKET. WE WILL LOOK BACK AND SEE THIS AS A PERIOD WHERE WE BROKE THE BACK OF A LOT OF THE THINGS THAT HAVE BEEN GOING ON. BUT THERE IS A LOT OF WORK TO DO.A LOT OF VULNERABILITY AND WE NEED TO REMAIN VIGILANT ON IT.

Lee: DO YOU THINK THEY NEED TO TAP THE CREDIT LINE EXTENDED BY TREASURY?

Mudd: NO, IT'S AN IMPORTANT BACKSTOP AND IMPORTANT TO NOTE THAT'S SOMETHING THAT WILL BE PUT IN PLACE BY MUTUAL AGREEMENT, AND BE CONSIDERED IN THE BEST INTEREST OF THE COMPANIES AND THE MARKET AND SHARE HOLDERS AND STAKE HOLDERS. I THINK IT'S A POSITIVE THING. WE DON'T NEED IT NOW, AND I THINK THAT IT'S GOING TO BE ANOTHER ONE OF THOSE PIECES THAT COMES IN PLACE TO PUT THE FOUNDATIONS BACK UNDERNEATH THE MARKET. AND HOPEFULLY START TO GET US BACK TO WHERE WE WANT TO BE OVERALL.

Lee: IN TERMS OF THE TREASURY OFFERING TO BUY EQUITY IN THE STOCK, SHOULD BE NEEDED IN THE FUTURE? DO YOU SEE A SCENARIO IN WHICHTHAT WOULD HAPPEN IN THE NEAR FUTURE?

Mudd: I THINK IT'S IMPORTANT TO HAVE THOSE CAPABILITIES THERE. IT'S A JITTERY MARKET. AND THE DIRECTIONS HAVE TRENDED DOWN OVER THE COURSE OF THE PAST YEAR OR SO NEAR THE -- SINCE THE SUBPRIME CRISIS STARTED OFF. BUT I THINK THAT WE ARE NOW STARTING TO SEE A LITTLE BIT OF LIGHT. I THINK ALL OF THESE MEASURES ARE STARTING TO HAVE A BIT OF AN ARRESTING EFFECT. I THINK THAT WE STILL HAVE A LONG WAY TO GO. ONE MORE STEP, IMPORTANT, AND I THINK IT REFLECTS THE IMPORTANCE IN THE CENTRAL OF THESE COMPANIES TO THE HOUSING MARKET AND THE CORRECTION UNDER WAY.

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