1. Approve NOW a recognition of the deferred tax assets as net-worth by which FNMA would retain all its profits without reducing the balance amount (taxpayer bailout funds) it owes to the Treasury.
2. Sweep away all the current and future FNMA profits until the taxpayer bailout capital is fully repaid and then realize the deferred tax assets.
Option 1 will cause greater dependence of FNMA on the Treasury than Option 2 will do in the near term.
Option 2 is better because it will release FNMA from government ownership faster.
Both the options are accounting gimmicks.
What is more crucial is how much profits FNMA has earned, how much it is expected to earn in future and how much of the loan loss reserves it can release towards net-worth because future losses are expected to be minimized.