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One possible result of the Obama Administration's economic policies is a restructuring of the housing market. And, what is taking place is not to the advantage of the middle class, but again, tends to help those with the money and the connections to take advantage of what the government does.

The big article in the business section of the New York Times today says it all: "Wall Street's New Housing Bonanza."

The piece begins "Wall Street's latest trillion-dollar idea involves slicing and dicing debt tied to single-family homes and selling the bonds to investors around the world.

"That might sound a lot like the activities that at one point set off a global financial crisis. But there is a twist this time. Investment bankers and lawyers are now lining up to finance investors, from big private equity firms to plumbers and dentists moonlighting as landlords, who are buying up foreclosed houses and renting them out."

I have written about this before. See "More Evidence of How the Wealthy are Getting Wealthier" and "Restructuring the Housing Industry: Deals Galore."

This time around we have a company…that only went public last August…American Homes 4 Rent…that "talked to prospective investors at a conference in Las Vegas last week about selling securities tied to $500 million of debt…."

American Homes 4 Rent is based in California and began as a private venture funded by money from the Alaska Permanent Fund Corporation. This latter company "draws money from royalties paid by big oil companies and doles out annual dividend checks to every state resident."

The effort, founded by B. Wayne Hughes, who can be found on Forbes' 400 richest Americans, met with the Alaska investment team. The executive director of American Homes 4 Rent, Michael J. Burns, remembered from the meeting "Wayne said he thought this was the biggest real estate opportunity of his lifetime."

American Homes 4 Rent now rents out houses in 22 states.

Furthermore, there is even another movement afoot. Landlords still dominate the rental business. But, they just own and operate a "handful of properties."

"Wall Street has found a way to finance them, too. Cerberus Capital Management and Blackstone have started businesses that lend to small-time and medium-size investors.

"And there are discussions about bundling many of these small loans and securitizing them also."

Many, many families cannot find anyone to lend to them so that they can buy and own their own home.

This doesn't seem to be the case for others. According to a report by Keefe, Bruyette & Woods, "large investors have bought as many as 200,000 single-family houses and are now renting them out."

Let me add just a couple of observations about these results. First, in saying that the housing market is recovering one has to be careful. The housing market is recovering and housing prices are increasing, but the recovery is nothing like we have ever seen before. One has to be a little careful over the excitement because a larger portion of those buying the houses than before is not families that are picking up their spending.

Second, I have recently reported that residential real estate loans at all domestically chartered commercial banks have actually declined. With more and more people, groups of people, hedge funds and private equity funds buying these houses, much of the lending will not be reported in the category of residential real estate loans. They will generally be listed under business loans.

Third, as mentioned before, very, very low interest rates make these transactions very attractive. The people benefiting from these low interest rates are the people or groups of people, the hedge funds and private equity funds that have the equity to be able to borrow relatively large amounts of money.

Fourth, the securitization of these debts that will be paid off by the rental payments has created a whole new capital market instrument. And these new securities are drawing a lot of attention. The New York Times article relates the experience of the Blackstone Group which sold the first single-family rental securitization issue last fall. The $479 million issue attracted "six times as many investors as the private equity firm could accept!"

Fifth, once the financial markets accept a new innovation it is more than likely that the new innovation will become a permanent part of the markets. That is, a new entry that reaches the market will tend not to go away.

Just one other point on the topic of financial innovation. I have recently written a post that discussed the merchant funding business. Well, the news has just been released that Bob Diamond, the former head of Barclays Bank, has hired a major player in the financial services area as a founding partner to run a new venture "Atlas Merhant Capital."

What is Atlas Merchant Capital to do? The answer given was vague. Atlas Merchant Capital we are told would "pursue investments that have become available due to dislocations in the financial services industry."

In other words, the current state of the legacy financial services industry is a mess with the uncertainty of legislation against it and the uncertainty of the regulation it faces. Because of this there are lenders that are looking for funding and there are other markets that are not being served.

Economics teaches us that if there are market areas that are economically viable and are not being served… someone or something will arise and fill the need.

This is what is happening today. People are filling the need… and they can do it with the very, very cheap money their governments are providing them.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.