Trichet summoned by EU lawmakers to discuss subprime

BRUSSELS (Reuters) - The European Parliament has summoned European Central Bank President Jean-Claude Trichet to discuss in an extraordinary hearing on September 11 the financial market turmoil linked to the U.S. subprime mortgage market.

"The (European Parliament's Economic and Monetary Affairs) Committee is concerned by the subprime mortgages meltdown in the U.S., causing the drying up of credit supply and disturbances in the financial markets worldwide," the committee said.

Trichet meets with the influential committee every three months but this will be the first time an ad hoc meeting has been arranged.

"Mr Jean-Claude Trichet was not able to come earlier since he can only come after the meeting of the Governing Council on 6 September," the committee said.

Parliament has joint say with EU member states on financial services rulemaking in the 27-nation bloc.

The committee said further attention needed to be given to transparency and regulation of "entities engaged in excessive risk taking, such as hedge funds and private equity as well as to the role of the credit rating agencies in this context".

Markets had been betting widely that the ECB will raise euro zone borrowing costs by a quarter point to a six-year high of 4.25 percent at its September 6 meeting, but these expectations have now been scaled back as investors fear the credit crisis will damage economic growth.

The committee said ECB monetary policy had a role to play in maintaining growth.

EU lawmakers added that the national and sectoral based supervision of financial services in the bloc may potentially fail to keep pace with market developments.