UPDATE 1-Subprime drove U.S. housing boom--Fed's Poole

(Adds more Poole comment, background)

ST. LOUIS, Oct 18 (Reuters) - St. Louis Federal Reserve President William Poole said on Thursday the recent U.S. housing market cycle diverged from past experience because it had been fueled by developments in the securities markets.

"This cycle was really quite different and the boom was driven importantly by the growth of the subprime market and the securitization of those markets," Poole told a monetary policy conference hosted by the St. Louis Fed in his honor.

"(It) all worked as long as house prices were rising -- and it all collapses when house prices stop rising. Obviously, this segment of the market, it is going to be a long time before it comes back," Poole said.

Some subprime mortgages for borrowers with risky credit began with a low interest rate, which increased after the first couple of years to a potentially much higher level.

Poole, a voting member of the Fed's interest-rate setting committee this year, retires in March.

The Fed cut interest rates by a half percentage point to 4.75 percent on Sept. 18 to shield the economy from the housing slump after this triggered a global credit crunch in August.

Investors are divided on whether it will cut again at its next scheduled policy meeting, on Oct. 30-31.

The prominent role played by the housing boom in recent years in supporting U.S. consumer spending, and the sector's subsequent weakness, has prompted increased interest in the importance of housing in the overall performance of the economy. But Poole had reservations.

"I think this housing cycle is ... in many respects quite different from previous housing cycles, and has unique characteristics from the housing cycles from the postwar period, and is unlikely to give us much insight into the housing market for the longer run," he said.