March 12, 2012 / 4:40 PM / in 6 years

Hold those who caused crash accountable, or no recovery -NY AG

TEL AVIV, March 12 (Reuters) - U.S. economic growth will not be able to take off again properly until the public is persuaded that those who caused the 2008 financial crash are held accountable and that it won’t happen again, New York State’s attorney general said on Monday.

Eric Schneiderman, who has been named to a federal task force to investigate mortgage fraud and the origins of the financial crisis, said Americans remain angry at those responsible for the burst housing bubble.

The housing crisis saw Americans lose more than $7 trillion of equity in their homes.

“We are on the road to a steady recovery in the United States,” Schneiderman told a conference of Israeli institutional investors in Tel Aviv. “But we have to be very very cautious to enable this to happen.”

He blamed a wave of market deregulation and a relaxation of rules in the late 1990s and early 2000s, particularly in mortgage backed securities, that allowed investment banks to pass off risk for the crash.

He urged the federal government, which is writing new regulations, to enact laws that recognised the core reasons for the crisis.

“We have to be honest about what happened. We have to get people back to the confidence that a Triple-A rating means something, that an investment is what it says it is and that there is not one set of rules for the rich and powerful and another set of rules for everyone else,” Schneiderman said.

“Then we will get our confidence back. People will start spending and start investing and we can get American businesses and global businesses back on track,” he said. (Reporting by Steven Scheer)

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