Former SEC Chairman Breeden Disagrees With Treasury Seizure Plan

Former Securities and Exchange Commission Chairman Richard Breeden said Thursday he doesn't like the U.S. Treasury's new plan to allow the government to seize troubled non-bank financial firms and suggested the courts should have the power to get involved.

"Capitalism doesn't work if you don't have failures," he told the Senate Banking Committee.

Breeden, who served as SEC chairman between 1989-1993 under President George H.W. Bush, said in the case of American International Group (AIG), which averted collapse with a government bailout, the best approach would have been to take the "regulated insurance companies, sell them to other companies and put the unregulated activities - the swaps and everything else - into a bankruptcy procedure and wind them down.

"I would urge we spend a little more time looking at the range of all alternatives rather than just throwing them into the Treasury Department," he said.

Breeden also said he had concerns about the push in Washington to create a new systemic risk regulator.

"There is not single person, and no single agency, that can be omniscient about risk," he said.

"To me, our system is stronger if every agency is responsible for watching for, and acting to control, systemic risk in its own area of expertise."

-By Sarah N. Lynch, Dow Jones Newswires; 202-862-6634; [e-mail]