CDS Haven't Been Settled

The Financial Times reports that:

The "auction season" starts tomorrow, when the International Swaps and Derivatives Association has scheduled an auction for Tembec, a Canadian forest products company. This is followed by Fannie Mae and Freddie Mac
auctions on October 6. Then, Lehman is settled on October 10, and Washington Mutual is scheduled for October 23.

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The recovery value will be set by auction. Usually, the bond that
is eligible for the auction that trades at the lowest price - the so-called
cheapest-to-deliver - is the one that sets the overall recovery value for the
credit derivatives.

Apparently, CDS are settled by auction. So, counterparties don't know what their exposure is. There are about $500 billion just on Fannie and Freddie. Who holds this? How much do they owe? Who are the winners on this? Who are the losers? Here's a preview based on the Lehman bonds.

Lehman's bonds have been trading between 15 and 19 cents on the dollar, meaning investors who wrote protection on a Lehman default will have to
pay out between 81 and 85 cents on the dollar, a relatively high pay-out.

Again, I may be contrarian in thinking that the market's oversold. However, I think all the cash hoarding is bullish short-term. Everyone's as prepared as they're going to be for this. On the other hand, fear and panic can become a self-fulfilling prophecy.