[Congressional Record Volume 155, Number 132 (Thursday, September 17, 2009)]
[Senate]
[Pages S9527-S9530]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



                      Financial Regulatory Reform

  Mr. TESTER. Mr. President, I rise to say a few words about an issue 
that has been front and center in my office for the past 12 months--
reforming regulation of our financial markets.
  I am a family farmer. In my neck of the woods, farmers usually don't 
sit around and talk about economic policy and Wall Street financial 
institutions.
  But I do guarantee you that where I come from, everybody talks about 
common sense and why so much common sense seemed to be missing when 
America's financial industry almost collapsed a year ago.
  Everyone in my State felt the impact of what happened when Lehman 
Brothers caved in, when Fannie and Freddie hit a dead end, when AIG 
went belly up, and when we saw daily headlines about bank mergers and 
bailouts.
  We all paid a price because of a few greedy actors on Wall Street and 
no refs on the playing field. That price was $700 billion of taxpayer 
money. I opposed that bailout because it rewarded the wrong people, and 
I was concerned about its ability to create a single job for our small 
businesses or help one family farmer. I think it was a bad deal for 
Main Street.
  Last year, I asked Treasury Secretary Paulson--a former chairman of 
Goldman Sachs--about why this happened. His answer: ``I don't know.''
  Where I come from, answers such as that aren't good enough, and terms 
such as ``too big to fail'' don't make any sense at all. It is time to 
make some changes.
  After what we have been through over the past year, it is clear we 
need to reform the rules that keep America's financial industry on our 
side.
  How? Well, it is going to take a lot of hard work, honesty, and 
common sense.
  We have already started. I have teamed up with some of my friends in 
the Senate, from both parties, to cosponsor the TARP Transparency Act. 
Our bill will better track the money being used to get the financial 
industry back on its feet because it is taxpayer money and because 
taxpayers deserve no less.
  Over the course of the past year, the Senate Banking Committee has 
held countless hearings on regulatory modernization. The administration 
has put forth a good-faith effort in working with Congress in the 
massive legislative overhaul. Government has worked with the financial 
industry and consumers to outline the goals of sweeping new financial 
regulatory reform.
  I don't believe comprehensive financial reform will guarantee we are 
safe from financial crises, but, if done right, it can provide folks 
with adequate protection, it can bring confidence back into the 
marketplace, and it can minimize the risk of a financial meltdown 
similar to the one we barely weathered last fall.
  Unfortunately, there are those who don't believe comprehensive reform 
should be on the front burner. They are now lobbying to protect their 
own self-interests, their own profits, and the status quo over consumer 
protection.
  That is why we need to use this 1-year anniversary as a reminder to 
act now to protect consumers and investors, to close the loopholes in 
our regulatory framework, and to ensure that no company is too big to 
fail.
  We must regulate derivatives; supervise financial companies that have 
been outside the scope of regulation, thereby creating a level playing 
field; ensure that there is strong supervision of all financial firms--
not just depository institutions; build on the bipartisan success of 
the credit card legislation and pass mortgage reform to protect 
consumers; combine the numerous banking regulators into a more simple, 
streamlined, commonsense structure that is capable of supervising 21st 
century financial institutions; create an entity that will protect 
taxpayers from future financial corporate failures and minimize the 
need for further government action; increase capital standards to 
prohibit institutions from growing too big to fail; and we must ensure 
that those companies selling mortgages and securities keep some skin in 
the game by holding onto a portion of the underlying asset to keep them 
honest.
  As we move forward with regulatory reform, I will be working hard to 
eliminate any unintended consequences, specifically as it relates to 
community banks and credit unions.
  In Montana, when we talk about the banking industry, we are talking 
about community banks and credit unions. They are the good actors. They 
don't live on the edge. They didn't get into the Wall Street 
shenanigans that caused this mess.

[[Page S9528]]

  Montana's community banks and credit unions serve their towns and 
communities reliably and safely. We are fortunate in Montana to not 
have had a bank fail in over 10 years. We also have one of the lowest 
rates of mortgage defaults and foreclosures in the Nation. We have had 
very few problems as it applies to predatory subprime loans.
  The community banks and credit unions are not the problem. I wish to 
make sure we do not place excessive fees or regulatory burdens on these 
small but very important institutions, such as the community banks.
  Over the course of the coming weeks and months, I plan to work with 
Senator Dodd, the chairman of the Senate Banking Committee, and all my 
colleagues toward commonsense reform that will increase supervision and 
transparency of the financial markets, that will bring back investor 
confidence, and that will protect consumers and safeguard us from 
another situation where the greed of Wall Street penalizes hard-working 
families.
  Earlier this week, the President spoke on Wall Street. He said:

       We are beginning to return to normalcy.

  But he warned that:

       Normalcy cannot lead to complacency.

  I couldn't agree more. That is what we in Montana call common sense.
  Mr. President, I yield the floor. I suggest the absence of a quorum 
and ask that the time during the quorum call be charged equally to both 
sides.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. SESSIONS. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. SESSIONS. Mr. President, I wish to speak today on President 
Obama's nominee for the Second Circuit Court of Appeals--a court one 
step below the U.S. Supreme Court--Judge Gerard Lynch.
  I have carefully reviewed Judge Lynch's background and his rulings as 
a district court judge. He is a Columbia law graduate and a former 
Federal prosecutor in the Southern District of New York. For the most 
part, he has been a very good district judge. He is exceedingly capable 
and a man of high integrity.
  After reviewing his record and responses to questions from the Senate 
Judiciary Committee, I decided to support his nomination. I do so 
because I believe he will adhere to his judicial oath which requires 
judges to administer justice without respect to persons, to do equal 
right to the poor and the rich, and to faithfully and impartially 
discharge and perform their duties under the Constitution and laws of 
the United States and not above it.
  In responses to my questions, Judge Lynch affirmed that circuit 
courts have no greater freedom than district courts to decide law 
outside the bounds of precedent, but they must apply the law and the 
precedent to which they are bound.
  Judge Lynch also stated that a judge is to ``apply the law 
impartially'' and ``should not identify with either side'' in a case.
  Even though I will support Judge Lynch and admire him and enjoyed 
meeting with him, I want to share some concerns about his rulings and 
some statements he has made over the years that I think are matters 
that ought not go unremarked before his confirmation.
  The role of a judge is to follow the law regardless of personal 
politics, feelings, preferences, or ideology. I think, for the most 
part, he has done that in his cases.
  One case that is troubling, however, is U.S. v. Pabon-Cruz in which 
Judge Lynch attempted to get around the jury process and the sentencing 
process because he believed a mandatory minimum sentence required by 
Congress of 10 years for a conviction of receiving and distributing 
child pornography was unduly harsh.
  He announced that he would tell the jury about the penalties in the 
case, which is not appropriate. In its order prohibiting Judge Lynch 
from informing the jury about what the punishment would be in the case, 
the Second Circuit, on which he now seeks to sit, expressly stated that 
Judge Lynch's ``proposed jury instruction regarding the penalties the 
defendant faces if convicted is a clear abuse of discretion in light of 
binding authority.''
  Judge Lynch disagreed with the Second Circuit's decision, calling it 
a ``mistaken conclusion.'' Judge Lynch clearly believed he had the 
right to ignore precedent and established law and inform the jury about 
the penalties that were applicable upon their verdict of guilty so that 
the jurors, in effect, would have an opportunity to ignore the law and 
choose not to apply it because he did not think the penalty was fair, 
apparently.
  I am disappointed by the fact that Judge Lynch appears to believe 
this sentence was inappropriate, but more importantly, that he should 
have been allowed to invite jury nullification, which is, in effect, to 
say to a jury: You don't find the defendant guilty if you think the 
punishment is inappropriate.
  In response to one of my written questions, Judge Lynch said that 
while he accepts the ruling of the Second Circuit, he continues to 
believe his instincts were correct. He stated:

       The rationale for this decision--

  Of the Second Circuit which reversed him--

       which I fully accept, in light of the ruling of the Second 
     Circuit, was erroneous--was that unlike most cases in which 
     the jury fully understands the seriousness of the crime 
     charged, in that case the jury may have misperceived the 
     relative seriousness of the two overlapping charges in the 
     case.

  Judge Lynch's actions in that case are especially disconcerting when 
considered in light of his written remarks criticizing the textualist 
approach to constitutional interpretation.
  In a 2001 speech on the Supreme Court's decision in Apprendi v. New 
Jersey, Judge Lynch stated:

       I would like to welcome--

  Talking here about Justice Scalia and Justice Thomas--

     also to a more realistic, more flexible, and in the end more 
     honest way of protecting the constitutional values they 
     share.

  Judge Lynch, in effect, endorsed this flexible judicial philosophy 
and advocated it previously.
  Concern over his statements in previous years contributed to my vote 
against his nomination to the U.S. District Court on that occasion.
  In a 1997 law review article entitled ``In Memoriam: William J. 
Brennan, Jr., American''--that is, of course, Justice William Brennan 
for whom he formerly clerked--Judge Lynch admonished the successors of 
Justice Brennan that they must also engage in constitutional 
interpretation ``in light of their own wisdom and experience and in 
light of the conditions of American society today.''
  In that same article, Judge Lynch stated he personally believed it 
was a ``simple necessity'' that the Constitution ``be given meaning for 
the present.'' Judge Lynch's praise for Brennan's ``present-day 
meaning'' approach included the opinion that Justice Brennan's ``long 
and untiring labor to articulate the principles found in the 
Constitution in the way he believed made most sense today seems far 
more honest and honorable than the pretense that the meaning of those 
principles can be found in eighteenth- or nineteenth-century 
dictionaries.''

  So I have a problem with that speech from 1997 and that strong 
statement of adherence to the doctrine that Justice Brennan was the 
foremost advocate of a living constitution and that words don't have 
fixed meanings; that you can make them say what you want them to say to 
affect the result you think is appropriate today.
  The Constitution is a contract with the American people. We have 
every right to amend it through the amendatory process, but judges 
don't have a right to amend it based on what they perceive it to mean. 
Based on what? What information have they received that makes them 
think they have a better idea of what the Constitution ought to mean 
than how it has been interpreted for 200 years?
  This is a serious matter because judges are unelected. They have a 
lifetime appointment, and we give them that because we want unbiased, 
objective analyses. But it doesn't mean they are empowered to update 
the Constitution to make it say what they would like it to say today. 
They are not empowered to do that. In fact, it erodes democracy when 
they do that because the elective branches, those of us in

[[Page S9529]]

this Senate, are accountable. Judges aren't accountable.
  Another of Judge Lynch's cases that bears mention is United States v. 
Reyes. In that case, a police officer asked a defendant drug dealer, 
who had not yet been read his Miranda rights, whether he had anything 
on him that could hurt the officer or his field team. Even though the 
defendant had not been frisked, Judge Lynch concluded the defendant was 
the subject of a custodial interrogation under Miranda, and that before 
the police officer could ask whether he had anything to endanger the 
officers, he had to warn him of his Miranda rights. As a result, Judge 
Lynch excluded from the record statements that the defendant made at 
that time which implicated him in the crime.
  The Second Circuit--the circuit which he will now serve on--reversed 
Judge Lynch, holding that the public safety exception was in fact 
applicable and that the cases Judge Lynch had relied upon in his ruling 
were distinguishable. The court noted that drug dealers often have 
hypodermic needles or razor blades on their person that could pose a 
danger to police officers. Additionally, the defendant was not 
handcuffed at the time of the arrest and could have reached for a 
concealed weapon. The Second Circuit also noted that the questions 
asked by the officer were ``sufficiently limited in scope and were not 
posed to elicit incriminating evidence,'' and the police ``cannot be 
faulted for the unforeseeable results of their words or actions.''
  Judge Lynch has also advocated that Miranda warnings be administered 
for searches, which has never been the case. In a symposium commentary, 
Judge Lynch proposed a Miranda-type rule for searches that would 
invalidate consents to search unless the party whose consent is sought 
is first advised that he or she has the constitutional right to refuse 
such consent.
  Well, Miranda was never required by the Constitution. It was a 
prophylactic protective rule the Court conjured up. Somehow the system 
has survived it, but it has done some damage in terms of not getting 
the kind of admissions and confessions you might otherwise get. That is 
just a fact. At any rate, to expand that now to searches, which has 
never been done, I think is an unhealthy approach.
  You might say: Well, theoretically, if you are going to do these 
Miranda interviews you could do it on searches. But I would just note 
that Miranda itself is a protective rule, not a mandated constitutional 
rule.
  I mentioned the foregoing issues because they are of great concern to 
me. It appears, notwithstanding, in the vast majority of his cases, 
Judge Lynch has been a very careful judge who has followed the law. He 
has stated that he understands that circuit judges are ``bound by 
Supreme Court and prior circuit precedent, and their job is to apply, 
fairly and accurately, the holdings and reasoning of such precedent.''
  Given his commitment to do that, I will vote for him, and I hope he 
will continue his excellent service on the bench, but that he will 
interpret the law as written and will refrain from imposing personal 
views in his decisions.
  It is unfortunate, and I am concerned also, that the President, in 
his nominations, is moving a number of people for the Federal bench 
that are clearly activists. Many of them don't have the length of time 
on the bench that Judge Lynch does, or his skills as a judge, frankly, 
and it is causing us some concern, and we will have some real debate 
about it.
  The nomination of Judge David Hamilton for the Seventh Circuit Court 
of Appeals raises that issue and concern with me. The White House has 
said it intended to send a message with his appointment, and I would 
say that it did. Judge Hamilton's appointment is significant. Instead 
of embracing the constitutional standard of jurisprudence, Judge 
Hamilton has embraced President Obama's empathy standard. Indeed, he 
said as much in his answers to questions for the record following his 
confirmation hearing in the Judiciary Committee.
  He rejects the idea that the role of a judge is akin to that of an 
umpire who calls balls and strikes in a neutral manner. Rather, he 
believes a judge will ``reach different decisions from time to time . . 
. taking into account what has happened and its effect on both parties, 
what are the practical consequences.''
  Judge Hamilton also appears to have embraced the idea of a living 
constitution. The last time I was at the Archives Building, I saw a 
parchment from 1789--not breathing. It is a document. It is a contract. 
It guarantees certain rights to every American, and judges aren't 
empowered to rewrite it, to make it say what they think it ought to say 
today.
  In a speech in 2003, Judge Hamilton indicated a judge's role included 
writing footnotes to the Constitution. When Senator Hatch questioned 
him about these comments in a follow-up question, he retreated 
somewhat, but then gave a disturbing answer to the next question about 
judges amending the Constitution or creating new rights through case 
law and court decisions. This judicial philosophy has clearly impacted 
Judge Hamilton's rulings during his time as a district court judge. He 
has issued a number of controversial rulings and has been reversed in 
some noteworthy cases.
  For example, he ruled against allowing a public, sectarian prayer in 
the Indiana State Legislature and was reversed by the Seventh Circuit.
  He ruled against allowing religious displays in public buildings and 
was unanimously reversed by a panel of the Seventh Circuit.
  He blocked the enforcement of a reasonable informed consent law 
dealing with abortion matters for 7 years. He continued to block 
enforcement of that law and was eventually firmly and forcefully 
overruled by the Seventh Circuit for being in violation of the law.
  Judges, the State, and other people spent all kinds of money, and 
attorney generals of the State spent money and time and effort to 
litigate these matters, and finally winning, but, in effect, the people 
of the State, for 7 years, were unable to enforce a constitutional 
statute their duly elected representatives had passed.
  That is the power of an unelected Federal judge sometimes, and we 
need to be sure judges who go on the bench understand they are not 
allowed to do that. They are supposed to be a neutral umpire. If the 
case law and the Constitution say this is a good statute, they need to 
affirm it whether they like it or not, whether they would have voted 
differently or not. If he wants to be in the legislature and vote on 
the statutes, let him seek that office.
  A Federal judge must be able to dispense rulings in a neutral fashion 
so the emblem that hangs over the Supreme Court, which has been 
embraced by the American people--equal justice under law--can be 
carried out in every aspect of a legal proceeding. A judge must put 
aside political views which may be appropriate as a legislator, 
executive, or an advocate, and interpret the law as it is written. He 
must keep his oath to uphold the Constitution first and foremost.
  As I have said before, the Constitution is a contract between the 
American people, especially in a government of limited powers that is 
established by the people. It is a judge's duty to abide by the 
Constitution and protect and defend it and all the laws duly passed by 
Congress that are consistent with that Constitution. We have preserved 
our Nation well by insisting that our judiciary remain faithful to the 
plain and simple words of the Constitution and the statutes involved.
  So, Mr. President, I am impressed with the skill, the legal ability 
of Judge Lynch, whose nomination is before us today. I have reviewed 
his record carefully. I have listened to his answers. I have seen some 
of his speeches. In a few cases, they cause me concern. But I think 
giving deference--and appropriate deference--to the President's 
nomination, he should be confirmed. I will ask my colleagues to support 
the confirmation.
  But I want to say that all of us in this body, as well as judges, 
have a duty to preserve and defend our Constitution. You can erode the 
Constitution in a number of ways, and one way it can be changed and 
altered impermissibly is when judges redefine the meaning of words. So 
when a judge says we shouldn't resort to 18th century dictionaries, 
that makes me nervous. What does that mean? You just give a new 
definition to the word, the one that people ratified--the amendment 
they passed and ratified, which

[[Page S9530]]

had a certain meaning and was understood to have that meaning? Now that 
you are on the bench, and you think it shouldn't be enforced that way, 
and you would like to see a different result, you just sort of amend it 
or write a footnote to it? I don't think that is good judicial policy, 
and I feel an obligation--I think a number of us in this Senate do--to 
confirm good judges--men and women of character and ability and 
faithfulness to our laws and Constitution--but also raise the concerns 
that we have and to use every bit of our ability and strength to oppose 
nominees who won't be faithful to those high ideals that have made us a 
nation of laws and made us prosperous and free.
  I thank the Chair, and I yield the floor.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER (Mrs. McCaskill). The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. DeMINT. Madam President, I ask unanimous consent the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.