"A "contract" between Gov (Treasury) and itself (FHFA) is no valid contract. "
Of course, you can say that in a propaganda fashion (and perhaps it is even logistically true)...but legally speaking, FHFA is not part of the government, and therefore contracts are binding.
Let's also not forget that Watt wasn't even around when the contract was formed for the NWS. Therefore, it would be unreasonable to expect him to stick his personal neck out to breach what is LEGALLY a binding contract.
Also, even if you are 100% correct and the contract is not valid (as a court may find one day), you can't reasonably expect WATT to be the one to act on that invalidness before a court has found it as such.
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