"Few Tools Beyond Language"
It is often said that as long as the Fed keeps liquidity available and rates low, the housing boom will continue. Those voices believe the central bank to have supernatural powers over market forces. For a check on the theory, lets look at Japan, which enjoyed a stock market and RE bubble.
"The Bank of Japan on Thursday officially abandoned hope that the economy would return to inflation before March 2006. Given the bank’s commitment to keep interest rates at zero until deflation is eradicated, it implies a one-year extension of the zero-interest rate policy."
"With interest rates at zero and markets flooded with liquidity, the bank had few tools beyond language to affect market expectations."
Perhaps the reason the Fed and congress are doing nothing about the housing bubble is there is nothing they can do, but talk.