Sequestration: Those in the Beltway Will Have to do Some Belt Tightening
The dictionary defines sequestration as “the act of seizing property.” But as we all know from the news, sequestration also is synonymous with some serious budget slashing. the sequestration in place which may take months, the Obama administration is warning that the $85 billion in automatic budget cuts designed to help reduce the national debt will have far reaching effects that could cripple an economy that is finally starting to make a comeback. (For a little light reading click here to read the 394-page OMB Report on Sequestration.
Sequestration will come on the backs of government employees and result in cuts from education, healthcare, research, defense, etc. Where will a big part of these cuts be felt? Ironically, in a geographic region that essentially has suffered the least from the economic downturn – Washington D.C.
While most of the rest of the country’s housing market suffered during the recession – with foreclosures becoming the rule instead of the exception — the Beltway has had one of the strongest housing markets in the country.
During my many trips to the area during the economic crisis, it always struck me as odd how little suffering there seemed to be when compared to the rest of the nation and in particular Detroit, Arizona, Las Vegas and of course Florida.
But with so many federal workers living in and around our nation’s capitol, those federal spending cuts will eventually translate to job cuts, unpaid mortgages and … well we all know how that story has gone. There’s some belt tightening on the way for those in the Beltway.
That’s not to say others around the country won’t be impacted. Earlier this month, HUD Secretary Shaun Donovan proclaimed that if the cuts go forward the FHA won’t be able to provide the kind of assistance it has to help those trying to dig their way out of foreclosures, purchase a home and generally stabilize the housing market.
As Ronald Popeil of Ronco fame used to say: “But wait, there’s more.”
To add insult to injury, the banks actually could experience a silver lining to this dark cloud. The same federal regulators whose job it is to help set up and enforce Wall Street reforms, also know as Dodd-Frank legislation, may find themselves hampered by budgetary constraints.
More than a year after the law was passed, just one-third of the nearly 400 rules mandated by this legislation have been finalized. If you think those regulations have been slow to come so far, just wait until after March 1.
Not only have the banks become too big to fail and too big to jail, but now in sequestration they may have become too big to impale.
Real estate attorney Roy Oppenheim left Wall Street for Main Street, founding Oppenheim Law along with his wife, Ellen in 1989 in Fort Lauderdale, Florida, and is vice president of Weston Title and creator of the South Florida Law Blog, named the best business and technology blog by the South Florida Sun-Sentinel. Follow Roy on Twitter at @OpLaw or like Oppenheim Law on Facebook.