The EU also may revise disclosure laws, McCreevy said, in answer to the run on Northern Rock triggered by the 14 Sept announcement of a Bank of England rescue. In a speech in Dublin, McCreevy said that the UK's transparency rules were too strict.

McCreevy said bad lending practices were chiefly to blame for the rise in US mortgage defaults that spread fear among lenders and dried up short-term corporate funding. He said urgent scrutiny will be applied to "securitization and off-balance-sheet items" of banks that repackaged risky loans as securities and sold them to investors at an overstated profit.

"That issue is going to have to be addressed by regulators, sooner rather than later, " McCreevy said. "I have some ideas myself. I haven't tested them in the marketplace."

Losses on subprime loans, repackaged into securities held off bank balance sheets in structured-investment vehicles, also figured in the bailout of IKB Deutsche Industriebank of Germany.

The credit turmoil has had one positive side effect, that of revealing problems in the marketplace, McCreevy said. "Now that the tide has gone out, the state of undress of many participants in financial markets is there for all to see, " McCreevy said. "Bare bottoms all over the place."

He said credit-rating companies also must change some of their practices as a result of the market turmoil, which spread in part through declines in the value of highly rated bonds backed by subprime loans. Critics contend the biggest firms have a conflict of interest because they are paid by the issuers of the securities they rate.

McCreevy suggested the rating companies . . . of which the largest are Moody's Investors Service and Standard & Poor's . . . may bulwark their independence by being placed under the supervision of special board committees, staffed by non-employee directors.

"I'm not for the life of me saying this is the only way it should be done, " McCreevy said. "I just throw it out for debate."