To quote a former US President..."Here you go again"....more US Congressional meddling in the housing market and at what price?
The following legislation was proposed in the US House of Representatives in May 2011. Don't know how far it will go, but the National Association of Home Builders (http://www.nahb.org/page.aspx/category/sectionID=1831) is in favor of it:
Home Construction Lending Regulatory Improvement Act of 2011, H.R. 1755 for AD&C or acquisition, development and construction loans. Source: Link to article addressing the proposed legislation
Basically, it allows financial institutions to (a) exceed it's financing limits for projects near or that will be completed; (b) ban the use of foreclosures when performing an appraisal and using an arbitrary value when the project is finished; and (c) prevents regulators from interfering with lenders to stop loans in trouble but still making payments under original terms and conditions.
Is this an example of "too small to fail, but too big in the aggregate to succeed?"
Nevertheless, even though new home sales have jumped (just clearing out some backlog) new home construction is down about 25% from this time last year - http://lansner.ocregister.com/2011/05/17/really-more-bad-news-from-nations-builders/110155/
Builder confidence is pretty low and not rising any time soon - http://realtytimes.com/rtpages/20110518_confidence.htm
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