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Wall Street Whispers: Will Obama Slay the Fannie and Freddie Beast?

WASHINGTON (TheStreet) -- A startling whisper has been reverberating around Washington and in the main stream press: That President Obama might slay the beast of Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) once and for all.

Such a move would fundamentally change both the way Wall Street operates and the way Americans think about life.

The Obama administration appears to be suggesting -- very subtly -- that homeownership isn't a God-given right. That the American dream has morphed into an American entitlement. That millions of people who should not have been homeowners in the first place ended up paralyzed by unsustainable debt as a result.

And that, finally, to repair the system, the Fannie Mae and Freddie Mac model of subsidized housing should be resigned to the past.

Of course, senior administration officials who have been suggesting such a change aren't the first ones to come up with it. Republicans and scholars have been saying so for quite some time.

Yet, it's important that folks in Obama's camp are starting to come around to the idea -- publicly -- that fewer Americans ought to be homeowners. Ultimately, they will be responsible for the structure of U.S. housing finance going forward -- as well as the direction of trillions of dollars in private money that moves along with it, and the way major money center banks like Bank of America (BAC), Wells Fargo (WFC), JPMorgan Chase (JPM) and Citigroup (C) operate.

The administration has yet to "officially" outline any plan for the future of Fannie, Freddie and other so-called government-sponsored enterprises like Ginnie Mae and the Federal Home Loan Banks. Yet evidence is piling up about a shift in thinking -- from a model where the government is heavily involved in mortgage finance to one where it's largely absent.

"This crisis reaffirmed the need to achieve a better balance between ownership and rental housing," HUD Secretary Shaun Donovan told lawmakers in the spring.

Another senior HUD official was more direct in an interview with the Washington Post recently: "In previous eras, we haven't seen people question whether homeownership was the right decision. It was just assumed that's where you want to go. You're not going to hear us say that."

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