House Speaker Nancy Pelosi (D-CA) signs H.R. 1424 on Capitol Hill on Oct. 3. Photo: Getty Images U.S. Treasury Secretary Henry Paulson's historic $700 billion financial rescue package went from words to action in a matter of 14 days. On Oct. 3, President Bush signed the bill, which aims to shore up the nation's financial system by buying up banks' troubled loans, into law. The controversial bill's passage was delayed after the House unexpectedly rejected the original bailout plan earlier in the week.

The NAHB banged its drum in support of the rescue package, demanding speedy action from Congress to pass the bill.

However, others were concerned that the legislation failed to do enough to help housing, especially when the government's $7,500 first-time home buyer tax credit was proving ineffective in spurring home buying activity and a down payment assistance ban was set to kick in on Oct. 1. One particular criticism was that the legislation did nothing to address declining home prices.

The most recent Case-Shiller data showed that the 10-City Composite Index for July sank 17.5 percent from the previous year, marking its 10th consecutive month of record declines. The rate of decline, which slowed in May, ticked up slightly between June and July to 1.1 percent from 0.6 percent from May to June.

Neither Lennar Corp. CEO Stuart Miller nor KB Home CEO Jeffrey Mezger sounded an optimistic beat about the bail-out measure during their most recent earnings calls.

Said Miller: “Sooner or later, Washington will connect the dots that indicate that a floor in home prices will provide the foundation on which we can actually build a future. The current stop-gap measures to aid hard-hit financial companies will be repeatedly frustrated by falling home prices and the securities that back them. Any meaningful solution to the credit crisis will necessitate a simultaneous stabilization of the housing market. The housing stimulus bill that was passed by Congress in July simply was not enough. In fact, I would argue that the bill was net-net antistimulative.”

Mezger kicked off his opening remarks similarly: “The past few weeks have been truly historic and certainly represent the most drastic change in the capital markets that I have seen in my lifetime. While it will be some time before the impact of any comprehensive government intervention will be fully understood, we welcome any steps that help to stabilize the mortgage markets and increase consumer confidence. However, it should be noted that the current proposal provides no direct relief for housing despite the fact that policymakers recognize that, once again, housing will be a cornerstone for the broader economic recovery.”

BIG BUILDER's proprietary survey related to the bailout also revealed that respondents were skeptical about the ultimate success of the legislative measure.

One out of every two respondents expected the plan to have little to no effect on home process. Less than one third—31 percent—believed the proposed bail-out would help to stabilize home prices. Eleven percent said they believed it would contribute to a decrease in prices, while 9 percent expected the net result would be an increase in home prices.

Far from optimistic, some of BIG BUILDER's readers appeared to take a rather pessimistic view of Treasury Secretary Paulson's proposal. Said one respondent, “It will further hurt our national infrastructure.”

—Sarah Yaussi and Lisa Brown