Jul 28 2003


Good morning. I appreciate the invitation to speak here today. I would like to thank Chief Justice Moore for the kind introduction. I would also like to take this opportunity to recognize him for the service he continues to provide to the people of this state with his principled and deliberative leadership on the Alabama Supreme Court. A forum such as this is a great environment for our judicial leaders to share ideas, discuss issues and learn from one another’s experience. Although faced with the same budget problems that many other states find themselves in, Alabama’s court system continues to serve as a model for others around the nation.

As the ultimate defender of individual rights and the protector of civil liberties, our judicial system has never been more important. And today, as we face many new challenges ahead, an independent judiciary that checks the powers of government has never been more necessary. In this changed environment, an independent judiciary that checks the powers of the other branches of government has never been more necessary.

The optimistic and carefree attitude of the late-nineties has given way to a more sober and serious national perspective. The variety of reasons behind this change are both obvious and subtle, the most compelling of which is unquestionably the terrorist attacks of September 11th, 2001. As a result of that unfathomable tragedy, we have shifted our nation’s entire foreign policy, restructured federal, state and local governments and forever altered the way that Americans had grown accustomed to going about their daily lives. As a country we continue to deal with the ramifications of terrorism, with ongoing military operations in Iraq and the looming confrontations associated with our commitment to eradicating tyranny and hostility wherever it breeds around the world. This fight has drawn the resources of a large portion of our military apparatus and placed a significant burden on the economy. The new expenditures associated with this fight combined with an economic downturn and the burst of the dot-com “bubble” have caused governments to confront short-falls on both a national and state level. The federal government is currently running deficits while staring at the realities of budget hardship for the near future. Alabama is not immune to the realities of this new environment, as the state faces the same fiscal realities that are commonplace throughout the country. While I am confident that the policies that have been proposed by the Administration and implemented by Congress will ultimately yield renewed economic growth, it behooves us to remain focused on the realities of today.

It is precisely because of this unexpected burden that we carry as a result of our war on terrorism that we must do everything in our power to mitigate the other threats that we face to our continued prosperity. As judges, you deal first hand with and are keenly aware of the problems that we face in our society.

As a member of the U. S. Senate, and now the Chairman of the Banking Committee, I am deeply involved in many of the same realities of a transformed America. One particular issue which weighs heavily on our road to economic recovery and ultimate long term stability are the continuing revelations of corporate greed and misconduct that have appeared all to often as headlines in our morning newspapers. Once vaunted and celebrated companies such as Enron, MCI Worldcom and even HealthSouth, have become the poster children for corporate mismanagement and accounting fraud. Subsequent investigations into the management of these and other companies have divulged a culture of greed, manipulation, and disregard for the investors that have placed their faith, and much of their life savings, into them. In Congress last year, we worked to identify and legislatively address the laws that allowed these companies to operate in an environment in which manipulation and greed proliferated. The passage of Sarbanes-Oxley was a significant step in the right direction towards curbing these abuses of power and trust.

I intend to continue to monitor the implementation of the Sarbanes-Oxley legislation and continue to review how it is working and whether anything needs to be done to improve upon it.

In addition, this year the Committee has investigated the conflict of interests within Wall Street research departments and the ramifications of the so-called “Global Settlement” between state and federal regulators and prominent investment banks. The jury is still out as to whether corporate America has finally gotten the message that malfeasance and manipulation of investors is something that will not be tolerated in this new business environment. I fear that the cost of settlement will be seen as a cost of doing business for many of these firms. I fear that they will perform a cost-benefit analysis and determine that a settlement payment is a small price to pay for the huge sums to be gained from exploiting conflicts of interest. The consent decrees that the firms executed contain the standard legal boilerplate whereby the defendant neither admits nor denies any wrongdoing. But in this case it is particularly telling. I believe that the firms are less than contrite and simply consider the fines and penalties as a means to put the issue behind them and move on. This settlement is the first step in exposing conflicts, sanctioning illegal conduct and reforming the system, but it cannot be the last. As a result of the settlement, the investing public has received notice as to how the Wall Street game works. Notice, however, is insufficient to restore investor confidence. When we seek to punish these wrongdoers by taking corrective action in the judicial system, we must be fair, but we have the obligation to be demanding and appropriate in our punishment. It may very well may take years to completely change the culture of Wall Street, but public trust and a deep responsibility demands no less.

As Chairman of the Committee, I could not have a higher priority than to do everything in my power to return integrity, transparency and investor confidence to our capital markets. These elements are crucial to the way that our markets function. The trust that had been built between investors and corporate America has all but evaporated over the course of the last several years, and this lack of consumer confidence has held back the investment that is necessary for economic expansion. In February, we confirmed a new Chairman at the Securities and Exchange Commission, William Donaldson, to oversee our securities markets. We have increased the SEC’s staff and budget to transform what I expect to be an aggressive and energetic regulatory agency. Although changes cannot happen overnight, I believe we are continuing to take many of the necessary steps that will eventually result in investors once again looking at our markets as the standard-bearer.

Democracy demands accountability and transparency. Capitalism demands faith and trust. Both of these are threatened when the system is gamed for the benefit of a select few. It is difficult to pinpoint the source of the behavior innate in people who engage in criminal transgressions. Whether they commit armed robbery or defraud a retiree out of their savings, somewhere along the way they have missed out on the opportunity to learn the important values and ethical behavior required of each of us to participate in a civilized society. How do we change this? It is truly a long road. We know that religion, family, education and opportunity all have an influence on what path an individual will take in his or her life. As the supreme defender of individual rights and freedom, the judicial system plays a vital role in free choice and democracy. The inalienable rights given to a citizen of this country to raise a family, practice faith and seek out a better life are protected by our courts. That is what makes your work so challenging, commendable and vital. A healthy democracy demands constant vigilance not only by the people but also by the branches of government. Given the circumstances of world events, this is a charge that is far too important to be taken lightly. It is encouraging that those in this room recognize and appreciate your important mission. There can be nothing more important than preserving our democracy.

Thank you.