NEW YORK (TheStreet) -- Housing reform is dead, and Tuesday's delay of a Senate Banking Committee vote on President Obama's favorite piece of legislation on the issue was only the final nail in the coffin.

"At this point, we think the best the bill's supporters can hope for is to pass it out of the Senate Banking Committee," wrote KBW Washington analyst Brian Gardner in a note published after the announced delay of the vote on the proposed bipartisan bill to wind down Fannie Mae (FNMA) and Freddie Mac (FMCC) sponsored by Senators Tim Johnson (D., SD) and Mike Crapo (R., Idaho).

Image placeholder title

What killed it, it seems clear, was the lack of support from the more liberal members of the Senate Banking Committee. Note I wrote more liberal, no most liberal.

"Even if they get Schumer, Reed, and Menendez to support, the housing groups are going to support this and I assume that means Warren, Brown, and Merkley are ungettable," one lobbyist wrote to me last week. "So they piss off their base before an election and have to start all over in 2015? Seems very odd to me."

Susan Webber, a management consultant who writes the Naked Capitalism blog under the pseudonym Yves Smith, put it even more bluntly on Wednesday. 

"While it's good to see that a phony GSE reform effort has stalled, it's still disappointing to see that the Administration isn't being called out for backing such a garbage barge. But I suppose we can take cold comfort in the idea that this failure shows that Obama's power is falling fast."

Liberals objected to the bill on the grounds that it put even more power into the hands of giant banks like Wells Fargo (WFC) - Get Report, Bank of America (BAC) - Get Report and JPMorgan Chase (JPM) - Get Report. Among those making that point was consumer advocate Ralph Nader, who also objected to the fact that it ignored the rights of private shareholders in the GSEs including himself and giant fund managers like Fairholme Funds, Perry Capital, the Blackstone Group (BX) - Get Report and Pershing Square Capital Management.

But investors in mortgage securities like PIMCO also have problems with the legislation, as do several Tea Party-affiliated organizations.

Defenders of Johnson Crapo have argued that objections from the far right and far left mean the bill struck just the right balance. But housing reform is just as controversial as healthcare and far less urgent. Our current mortgage market, which relies almost exclusively on government backing, at the very least isn't putting sand in the gears of the economy.

So what was Obama thinking? The only explanation I can think of is that Obama is a centrist to his core and did not want to be seen as blowing off the issue. So he put something out there that he believed in, or at least one his financial team believes in: another gift to the banks. Congressional Democrats, to their credit, aren't having any of it.

Follow @dan_freed

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.