the pspa is a contractual agreement between us and the secretary of treasury. so modest changes tots pspa would be the first and most prudent way to address this issue. >> understand. >> but if that fails, the responsibility for that risk falls back on me as the conservator of these enterprises and we cannot afford to run that risk. >> well, thank you. my time has expired and so i would just like to ask if you and your staff could provide us with your legal analysis as to why you believe that you have the authority without getting agreement from the secretary of treasury and dealing with the third amendment. >> be happy do that, sir. >> thank you very much. senator brown. >> thank you, mr. chairman and director watt, again, thank you. your testimony you talked about the potential and who knows what impending concerns you have about tax reform and short-term losses. let me start with that. the president's proposed tax reform plan that would cut the corporate tax rate from 35 to 15, if the finance committee and others would come to that, we don't know yet obvious

they are not legislative options because the pspa is a contractual agreement. and i think the appropriate conversations about those options really need to take place between us and the secretary of treasury. the problem is that if the committee sends to the secretary of treasury the message that this is a no-no, to have those discussions, or to try to resolve this in a coordinated us -- it it leaves leaves it to us to have to unilaterally deal with it. which is something i would preferred not to do. >> which gets back to the dividend question. director watt: but there are ways to address this with minor adjustments to the pspa. and that is not a move toward recap and release. it is not an invasion of the prerogatives of the committee. it is not an invitation to housing finance reform. waywe have to have that the -- that leeway to do it. and if we do not have it come it is a bilateral -- if we do not have it, it is a bilateral agreement. if the two parties will not dance, i will have to dance by myself which is not a pleasant position to be in and it may not be

but there are ways to address this by minor adjustments to the pspa. and that's not a move toward recap and release. it's not an invasion of the prerogatives of this committee. it's not an invasion into housing finance reform, but we have to have that leeway to do it. and if the two of us don't have it, it's a bilateral agreement. if the two parties can't dance,, then i may have to dance by myself, and that's, that's not a pleasant position to be in. [laughing] and it may not be pretty, but, but i have the ultimate riskier, it's a point that i keep trying to make, which is why i made the analogy to my automobile and the collision bay. somebody has to assume that ultimate risk, and right now unless we can assume it together, it also me. >> you are referring to you and treasury? >> that's correct. >> i appreciate what you read iterated several times i do want to restate it, that any of the news you may boldly make, whether it is agreement with treasury or a unilateral move, which i do not point you should make, that those are not moves towards recap and