fiduciary in the statute. years and years ago when it was first adopted and a court interpreted the law it was a duty and what the advisor's act does require is the advisor recommend suitable investments to its customer. you see the world suitable once again usinge ing used in a different context but focusing on what is in the customer's best interest. the only way to know that is the facts and circumstances surrounding that situation. >> a broker dealer is not subject to a suitability obligation. if you're interested in determines whether there are abuses in the industry you only go in the internet and listen to taped conversations gao created that have a number of sellers misrepresenting ira costs and trying to convince people to do rollovers. what i don't follow in this debate and it comes back to this

one issue is even if there are no abuses the industry cannot handle having a best interest standard applied to these recommendations. that's what the dol is doing. it's almost the standard that is applied to broker dealers under the suitability standard. the recommendation must be consistent and you look under the hood and it turns out these are some of the worst violations that you can find. in one case the court said this was egregious misconduct. these are cases if many if not

most broker deals. the unsuitable recommendations are accompanied by other violations including failure to supervise, churning, misrepresentations or omissions and unauthorized trading. the suitability standard works. let's not make believe that it's actually serving clients best interest. >> you've said the current rules support a race to the bottom. why do you think they support a race to the bottom currently? >> i think hearing the panelist discuss all the legalese involved here it's a well documented fact that it's very confusing out there when you're

out there as a consumer and trying to figure out who to turn to for financial advice. it's too easy for those responsible professionals to be out competed in the marketplace today by people who offer themselves as offering low cost or free advice when they are being paid under the table to steer people to higher costs, lower performing investments. the consumer doesn't know they are being paid by third parties to do this. they think the advisor is working for them.

you can trust the person you're paying, that you've hired to give you financial advice has to put you first and has to put your best interest first. you won't have that race to the bottom in the marketplace anymore. i met with so many investment professionals at my time at the white house. they are hard working. they got into this job to help people achieve the american dream. they were trying to help people save for college save for their first home save for retirement. they are trying to do right and we just need rules of the road that are protecting consumers adequately so the best advice can win out at the end of the day. that's all these rules are trying to do. >> speak from the industry's perspective. you're correct in terms of what the current standard for broker dealers. fidelity absolutely supports a best interest standard. that's what we do today. we put our customers first.

i would think most in the industry support that. many broker dealers have agreed to support that. i think that's huge for the department. if that's the overarching goal of this rule to get the industry to support the best interest standard then i would say the dol has won. the industry has agreed. however, i would say that the way the rule is currently structured is that potentially the customers those we all try to serve, the average, hard working americans won't be able to have the choices they currently have today in terms of their service models that they enjoy and the access to all of the investment advising guides.

a lot of it is affordable. people have different ways that they engage with service providers. there are commission base accounts. fee base. customer protection, that's what we want. we want them to get the advice and guidance they need to make those life challenging decisions. decisions around retirement and decisions around how do you plan for life like if 529s. how do you save for a home and all those various things. the rule has to allow the structures in place so that they can continue to get that advice

and guidance. >> we seem to have general agreement that they should be working in the best interest of their clients. i suspect if this rule is enacted you'll make more money. but from what i understand you've been a critic of the rule. >> we've been knowledged to have responsibility to our clients for centuries.

we have very well professionally developed codes of conducts. lots of guidance around that. i have to say i'm not at all sure that in their details our professional standards would pass mustard under the requirements, at least in the details of the requirements of the labor department's proposing here for retirement advisors. >> is that a bad thing. there's been a few lawyer who is did not live up to those obligations. >> we've had solutions for cases where lawyers haven't lived up to those obligations. the current system of regulation has substantially protected retirement investors.

there's been solutions available that have allowed remediation for that. not to be arguementative about this but it takes more than 400 column inches in the federal register to publish. it's hard for me to see that is a streamline pattern for compliance for the industry. first is technology cost would be substantial to come in to compliance with the proposal. the proposal has three new explicit disclosure regimes, a

public website, a point of sale disclosure and an annual report and a fourth implicit disclosure requirement is on six month notice you have to be ready to turn over the labor department detail about all your accounts and the transactions in your accounts. the respect to the investment options available to participants in 401(k) plans. we have in some cases a total of six disclosures provided around advice to 401(k) plans. it's a certainty and this is not to impugn motives. it's a certainty that the cost projections for those technology

improvements are low. it's the nature of the way agencies are obliged to develop those. it turns out the sexual cost was a huge multiple of that $205 million. i'm confident that there are hundreds of millions of dollars in additional technology cost to comply with this rule. >> the administration did a study that found many billions of costs currently to customers

ill served by their advisors putting them into high cost products, et cetera. compared to the many many billions of dollars that may not sound alarming to someone, those costs, even assumeing you're right. >> getting into a debate about the various academic studies out there. what conclusions you can fairly and unfairly draw from them. the additional data that will come in through the notice and comment process. the studies that show, for example, that savers who work with advisors tend to have larger account balances in their retirement plans than folks that do not. the data is what the data always

is. it's our cost projections are imperfect. our projection of benefits are imperfect as well. the department speculates if this proposal goes through that costs will come down and that investment results will improve for retirement savers. it's hard to argue about that. who wouldn't be happy if that was the case. from the industry side there's concerns that smaller players will be squeezed out of the market because of compliance and risk. choice may retract for retirement savers. if you're an investment advisor and looking at 1% a year.

is a reasonable compensation for your services. if you're working for somebody who has a $10,000 account 100 bucks won't get the job done. it won't let you make a living. it won't let you do the work. >> how is that different from the current situation? >> in the current situation you can approach that relationship in a different way. you can be compensated on a commission basis. >> the dol listened to legitimate concerns. the rules still allows commissions and other forms of sales based compensation and allows revenue sharing payments. the business model is still going to exist. they're just going to firms are going to have to provide advice subject to a best interest standard and charge reasonable fees, have policies and procedures that are reasonably

designed to minimize and manage harmful conflicts of interest. that strikes the right balance. the industry has made a lot of technical objections about the rule and how it's going to raise their compliance cost and ultimately filter down to investors but that's belied by the fact they are already fiduciaries serving small balance investors. they are doing it according to a fiduciary standard and doing so profitably. it's in addition to the robo

advisors. vanguard provided personal advisor service. all in cost for advice and products under 50 basis points. >> can i jump in real quick too. the best interest contract in its essence is simple. it's saying make promise to your client that you're putting the best interest first. develop policies to make sure wrour you're monitoring employees and be held accountable if you did not do that. this 400 pages of proposed regulation are proposed regulation. the department did not come forward saying this is the plan and this is what we're doing. they invited extensive comment

on every piece of the regulation and the exemption and this best interest contract. it was remarkable to me when working on this to see how much everyone had in common here. everyone is trying to get people to save more for retirement because we see americans don't have enough. the decision is complicated. i think it's the goal here is for people to come forward from all sides, all perspectives and tell the department how do you make this more workable. how do we streamline this. many people came in and had meetings to tell me they used this disclosure. they have recommendations on disclosure and i would say come forward and tell the department how you would design disclosure that you think is effective and works and helps people understand their product but disclosure alone cannot be the solution here. you have to pair disclosure with accountability. >> let me interject for one second. you used a few terms that some

of the tv viewers may not know. you referred to 50 basis points cost. that's half a percentage point, just to clarify that. you also mentioned robo advice. that's a term that was new to me when i started researching this. would you explain what we're talking about? >> it's technology. it's computerized models that provide high quality low cost investment advice. there's personal capital wealth front. betterment that you can go online. you plug in the amount of money that you want to invest your goals, your risk tolerance. they invest the money for you. in addition to robo advisors there's actual people you can go to. cfp professionals provide financial planning services subject to fiduciary duties.

they provide high quality, low cost advice and so so profitably. >> i have a couple of points i'd like to make. number one you mentioned vanguard which is a final company. the one observation i'd like to make is you mentioned the $50,000 account being in your mind, i guess make an average type of account. if you look at some research done by the firm in 2011 the average ira account was probably in the range of 10,000. certainly less than $25,000. a substantially less than $50,000. i'd also like to go back to the best interest contract that's proposed. that exemption requires that you agree to act in the best interest that you have policies and procedures that would

mitigate conflicts of interest. i would say that the contract itself has its own problems. you're required to get that contract signed before individual. frankly, i don't know anyone who is thinking that they are going to sign a contract with you before they have heard what you have to offer. >> the contract they are signing would not require them to go ahead and accept your services. use your services. >> but they still have to sign the contract. >> what does the contract require them to do? please -- you are required to get the contract signed. >> when you have a contract, you have to include the representation. when you're a client, you don't have to sign anything. >> one thing we haven't said very much about here is the actual conflicts of interest. that people allege. i am going to run through what i am sure is an incomplete list.

it is said that the very existence of commissions could be a conflict of interest because it is presumably the advisors wanting the have more transactions which would generate more commission. it is said it is a problem at the broker will get better compensation if he sells you a mutual fund from one company service another company. often the company that will pay the most compensation is the one that employs the broker. some foreign governments have simply said, none of this is allowed. this proposed rule allows a lot of it under safeguard. i think the safeguards led to those 400 column inches, if i'm not mistaken. sounds to me like the industry scored a big victory in this. am i wrong? >> i think at the end of the day, i don't think the question is going to be about the best

interest standard. i don't think the industry's concerns will be about disclosure. these are heavily committed industries already. disclosure is a fact of life. if there is a sensible way to provide that disclosure, i think that won't be a problem. the question is whether if this exemption is, in fact, workable, or if it is a poison pill. whether it is something that just can't be accommodated in a reasonable way in the real world. i would not speak for fidelity, but if fidelity has 17 million 401(k) participant accounts there is not a chance in the world they'd get 17 million people to sign those contracts. just won't happen. that is just one example. >> what would happen -- i happen to be one of those 401(k), ira clients at fidelity.

identify been known to throw away mail i get. i don't want to indicate that others do that. what happens when i throw away the mail that is asking me to sign this contract? does anyone want to tell me? >> you are assuming that will be a requirement. it is a proposal. we agreed with the first repose -- proposal in 2010. it was unworkable. i was a critic of it. it is not clear this is an equally balanced champion -- those who are critics -- but he is correct those who execute the contract, it will not be workable. that is why we have a common comment period. there are problems with the proposal that are unworkable but that is why we do not take a scorched earth attack on a proposal. we have constructive engagement as most members of the industry have provided and many of the broker-dealers have not had a major problem with it that deal

with these issues. there are a couple of problems that will be unworkable for the industry and i expect them to be fixed. there are a couple problems from an investor protection point of view. i think these things will be death with. the big exemption is really only three pages. the 400 pages -- >> now i'm adopting a term as the best interest conflict. >> thank you. i thought that was a pen company. i apologize. >> dealing with the individuals often legitimate problems. you asked what the conflict is. i have a chart, and i am the law professor. and this is obviously on a budget. what this shows is each of these fund complexes is paying in basis points to a particular broker-dealer for selling their

fund. >> a basis point is 1/100th of a percentage point. roughly 1/8 of a percent. >> the concern is this is a conflict of interest and you might be more incentivized to sell this fund and get more basis points than the one at 2.4. the cynics might think these are obviously the funds being sold. edward jones is a broker-dealer and the overwhelming majority are american funds managed by capital research, one of america's great companies along with fidelity. it shows edward jones is managing the conflict of interest to a large extent. small percentages are being sold to these fund company shares. what they want to do and what is already requires essentially, is that you have procedures in place to manage this obvious conflict of interest and all broker-dealers already have

relative distribution that looks like this, and are to disclose those conflicts and tell the customers what they're paying and dollars common idea of what conflict might be costing them. and then there are a couple of ways that it will be expensive to comply with. this is concretely what they're concerned about. all of this can be solved with that small account of $10,000, instead of selling them a fund that charges a 3% load, they pay $300, which would be typical, and you have to think hard about whether you should also sell 4%, 5% and 6%. the broker in that case has incentive to double his conversation by selling you a virtually identical fun for twice the amount of money involved. concretely, that is what we are talking about, differential agreements for the same thing, and this shows revenue-sharing payments. >> i would like to agree with the professor in a couple of respects. in law school, i always agreed with my professor.

[ laughter ]. >> so i want to say that you're right. this is a proposed rule. what the industry would like to do is to work with the administration and the dol to get this right. you are correct there are unworkable provisions and we are very concerned that from the perspective of the participants, and a note there are -- i know there are concerns, costs and that makes sense. at the end of the day, you have real people trying to make difficult decisions, and who are trying to get it right. we want to continue to work with the administration. i believe there is a balanced approach to solve this problem. going back to your comments i agree with you wholeheartedly in terms of the broad principles that were presented by the administration prior to the proposal of this rule.

meaning the standard there should be reasonable compensation. disclosure of conflicts. that's what this is about. investors will continue to have choice and access to the products and services that they get today. for us, it is the things they need and want on their own terms. i think there is a path forward and the industry wants to continue to work it out. what is important is that we want to actually see what the dol is thinking about. this is the second time we have have the re-proposal. we want to make sure we get it right for all stakeholders, primarily for the average investors, 80% of customers we service are average everyday, working people and we need this to work for them. of the 17 million customers in the 401(k) plan, it will be a

challenge to get them to sign a contract, even if it is three pages or 300 pages. it is not what they're used to doing. the contract has been entered into with a planned sponsor. for most participants, they will think the sponsor whoever, fidelity, if we're lucky enough to get the business, they have engaged with them, so i can assume that they are providers comfortable with it. to suggest to them before you have a conversation around take him a hardship, because that happens every day, you say, you have to sign this contract. and for most of the customers, that will be frustrating to them. they will be confused, and for them, they just will not do anything. they will not do anything to put them on the path. >> also, it is great to hear how much there is agreement on the panel and how much people think that they want to contribute to this comment process.

it is a relief to hear that. from my old job. but, i will say there is a lot of evidence the department learned a lot over the five years and changed the proposal substantially from what was originally put out there in 2010. they listened and there is evidence they listened. if you constructively engage again, i think you'll be pleasantly surprised what will come out on the other side. because they were very transparent about what they're thinking right now, what their questions are what the various ways they could take the final rule are. some examples of the things they did that would be changes and were responsive to what industry asked for, they did not ban commission and revenue-sharing. they said to figure it out and we want this to be business model neutral and preserve choice. people want a one-off transaction, they should be able to have a one-off transaction. there should not be an on going

duty to monitor. so they preserved that flexibility. they also radically changed the way exempts are usually handled by the department and offered a standards-based approach. the industry said the way the rules are currently written, they are very narrow. anytime we want to contemplate changing business practices, we have to negotiate a new exemption that is not workable. the department said, let's see if we could modernize this and make it more adaptable to the contemporary marketplace and allow businesses to evolve over time and change practices. that is the essence of what this best interest contact, bic is trying to do. saying to develop policy procedures, be able to update and change your business models without having to come in and renegotiate and show to the regulator everything you want to do. >> we're about to go to questions from the audience. i want to interject, there is a

fee charged to mutual funds which enables brokers to be compensated on a continual basis for the fact that their investors own that mutual fund, and still to claim that fund is a no-load fund because there is no upfront sales charge, they have been controversial in the past and are widely excepted. that is what a 12 b-1 fee is. i'll let you respond, and then i want to go to questions. >> there's one other aspect to discuss. when you talk about the contract exemption, it does alter the choice of investment products and services. the dol has proposed a limited list of investments in which you might recommend to a customer. none of those investments would include futures commodities, which may in fact be appropriate for particular customers. if it really is a best interest standard, then the person who is the financial professional

should be allowed to exercise professional judgment based on the facts and circumstances, about which particular services are ones that best meet the needs of a particular customer in front of them at that moment. >> this question is coming from someone in washington dc named john. what current practices would be prohibited under the proposed fiduciary rule and what kind of financial services professionals support it or is there universal opposition? >> several things i think would be prohibitive. one thing i want to point out in particular, this goes to policy dealing with the coverage issue. as we think about small plans those with less than 100 participants, under the current structure of the rule, and i doubt the dol had this

intention, but the way the rule is structured financial advisers would not be able to help small businesses with the formation of plans and for those who currently have plans with maintaining those plans. for a lot of small businesses, it is difficult to determine what the appropriate contribution levels they should require into a plan. in terms of defaults. they have concerns about the appropriate investment options. there are a lot of mutual funds and other products from which they can choose. >> from all plans, you would not be able to offer -- >> you could not engage in conversations to help them make these decisions. >> what other practices that are current practices would be prohibited under this rule? >> best interest contract exemption. policies and procedures that

would be reasonably designed to mitigate the harmful effects of conflict of interest. they could not structure their compensation regime to reward the selling of certain products. they could not face bonuses or sales quotas on the sales of certain products. they can still charge compensation, which means a higher amount for selling one product over another, but it has to be based on neutral and objective factors. not compensation. if i can go to the list of permissible assets being narrow, it's quite extensive. includes all mutual funds, open-end and close-end funds. etf, exchange listed, stocks, corporate bonds, treasuries, so what it doesn't include is the high risk derivatives futures that you'd like to include. it does not include private equity, these are riskier assets

that are usually allowed -- >> that only rich people are allowed to buy? >> that's right. they are less liquid. more risky. less transparent. we're not saying that an investor, retirement investor, can't have those assets. if they want to invest in those assets, they can ask their broker to execute an order. if there is no recommendation, it's fine. the advisor can recommend they hold them outside the entire retirement account. or they could recommend that investment but not pursuant to conflicted compensation. >> it's not a question of they're riskier. there's risk in any investment. just to say something a publicly traded security doesn't mean that there is more risk or less risk. it depends on the market conditions and a lot of things. excuse me.

excuse me. my contention is it ought to the left to the judgment of the professional dealing with the customer in terms of dealing with the customer's best interests. options and contracts will provide a hedge exposure because they are trying to limit their risk and accept that they are moving into riskier instruments. that is in their best interests. it is not necessary to say everyone has to have the same one-size-fits-all suit. >> also if an adviser does not receive conflicted compensation, they can make those recommendations still and will be able to offer those products and advise their clients on their products. if there are reasonable ways to think those products can be a -- in the common structure, go ahead and propose it as well.

>> i hate to disagree with you on one point. back to the question you had, but with respect to the various forms of compensation that is allowable in the market today, under the bic exemption that mercer mentioned it is the case all of those forms of conversation would be allowed. outside of that exemption, the proposal would disallow a great many of those forms of payment. there is a refinement. >> you know that is not true. issue only arises if you have conflicted compensation in the first place. >> i'm sorry. >> most commodities transactions do not involve non-fee level compensation. if an industry has examples of compensations models, i would agree the dol should not be making judgments about types of investments. nothing is prohibited. it is only prohibited if you insist your structure pay $10

for selling a and $20 for paying b. that's the trigger for all of this. otherwise, there is no issue. we need to keep that on the table. as well as the fact that that structure is deeply embedded in the industry. it would not be reasonable to just erase that. as far as prohibitions, what i would say is the practical effect of the rule, what it'll be in arbitration, where duty violations are the most common claim, with the rule, it'll prevent a defendant from arguing they're not a judiciary. i know this is detailed, but what happens in arbitration, where all are litigated, and arbitrators do not jump to any specific source of law, they apply the laws, you currently have to show the relationship, that they were a fiduciary. then it is easier to win your case as to what the duty

was required. what this rule will do is in that litigation, it will be a given they were fiduciary because of the contract prosigs provision provision. you have to prove what were the duties owed that were violated, which is more difficult. that will be the only thing you have to show. if i were to do a dollar and cents analysis that is going to be the greatest impact of the proposal. >> i want to get a few more questions in. do you predict most firms will use the best interest contract exemption, bic to continue to receive their current quote, conflicted unquote, compensation methods? >> i would hope once we are through the process that we would come up with an approach where the obligation is workable. i'm not sure if it's going to be the exact best interest

contract, if you will but there needs to be a way customers are protected. perhaps there is a legally enforceable representation. that's just an option. something that's enforceable and, at the end of the day you will hold the service providers and financial providers accountable. not sure how it would end, but a continuing conversation with the department and the administration, i think, is the approach that should go forward. >> i agree with pam on this. all we're looking for is a legally binding contract that holds advisors and their firms accountable. there may be some issues as to timing about when the contract is in place, but these are technical issues. they can clearly be sorted out. >> i just received another question that's relevant to this. would it be possible to have the department of labor service the

overseer of bucic commitments by providing, rather than forcing providers to seek $80 million plus contracts for the individuals. in other words, you'd have to get dol permission for your bic proposal. if you got it then it would cover your clients. if you did not get it, he will make an argument with the department of labor. >> the final rule doesn't require you go to your customers and sign off on a new contract. that's a given. i'm not sure i follow the rest. [ laughter ]. >> the investor advocates, we'll say, is too much of a burden. i don't think it'll happen. as to the other question i think what it sounds like is a percenty process. that is clearly not workable. this has to be a class based exemption that everyone can rely on. what will happen is, what you have is a negative consent

letter. they will send out amendments to every contract that says, here's what we're subject to. don't like it but here's what we're subject to. maybe dol would allow you to have an opt out, if you hate the idea of the broker-dealer being fiduciary. as far as new entities or new customers go, this will be added to the contract in the fine print of the bottom, right next to the mandatory arbitration provision. >> those who don't believe this problem is systematic, the problem under the current rules what's the potential harm of more strict regulation? i think this person's argument is, there are lots of rules that prohibit things that most people don't do anyway. but there's no harm in them. most of us don't murder people but we have no objection to laws to prevent it.

anyone want to answer that? pam? go ahead. >> there's no harm to, as you say, adding additional rules to say you shall not do what you shall not have already been told not to do. but i think there's more to it. you will have to build new systems that are currently not required today to conform to those requirements. in fact, the reality is people are already file eating certain roles if they're doing some of the conduct described. the sec would have to enforce it if it's an sec rule. a rule where they used to step up, securities commissioners, state insurance, state banking, they also have a role to play. if it's criminal, the justice department or u.s. attorney's office are adequately equipped to come in and take care of it. whether it's sanctions, penalties, jail time.

it doesn't hatmatter. if you are violating a rule, there are consequences. >> the other thing to not lose sight of is we are talking about requirement savings. not just any sort of banking insurance, investment products. congress has always placed a higher standard on retirement savings. there has always been a higher duty oath to people saving for a retirement because there are tax incentives that drive people into that marketplace. we have always had to work under -- world in which the services had to work under overlapping players, regulators, depending on the phase they entered into. >> protections, that is important.

i would think most folks in the industry would agree. what is concerning is that when you come out with regulations that may be overly burdensome, or extremely costly, or those that would cause some confusion among the customers. you are right in terms of retirement savings that's important. however, most customers, when you engage with them, whether it is a retirement account or not, they do not understand why your engagement would be different to retirement or non-retirement. all they understand is, we're coming to you for help, and they are looking for uniformity, that is important in terms of the regulatory approach. i would say once again, as we work through this with the department of labor and the administration, that we come to a place that makes sense and is workable, primarily for investors and the service providers who are trying to give them products and services they currently receive today on their own terms. >> is fidelity going to have a

different contract for retirement ira accounts and non-ira accounts? >> i'm not sure what fidelity will have. hopefully, we will work with the department of labor to come up with something that makes sense. >> the sec was supposed to deal with some of this under dodd/frank. it has not. when i go to an investment advisor seeking investment advice, i expect the same standard, i think, for the money in my ira's, for the money out of my ira's, in terms of trying to go with my best interests. should we just have a rule like that for all investors? >> the question, as you say, is very complex. you have got the interplay of the broker-dealer part of the regulatory structure, versus the investment advisory part. when the sec did a study in

2011, that was mandated under the dodd/frank act in which the straf staff recommended that the commission treat broker-dealers the same way you treat investment advisers, as it relates to aligning the standards, that was the recommendation in the report. then ranking member barney frank sent a letter to then chairman in which he told her if congress wanted to remove the exemptions out of the 1940, which governs advisors, it would have amended the statute. it did not ask the commission to do that. they asked the commission to come up with a different and not less rigorous standard. the efforts ground to a halt as people tried to figure out exactly how one accomplishes that result. the point you are making is that for the protection of investors, that's what the federal securities laws exist for. does not matter if the investment is for retirement,

college savings, and for your own enjoyment. you still have the investor protections part of the federal securities law. i do not see a difference between the two. the key is whether you have additional things that only apply to the statute, which is a sole interest standard. >> arisa exists because congress made the direct policy decision that we should care more about protecting other assets. cannot agree more strongly with the idea that what i invest in for pleasure should be regulated the same way as what i invest in for my retirement security. a new standard, one reason why the fcc should not be doing this and dll should. i derive no more pleasure out of watching members of congress trash the sec for being incapable of getting any rules done, until we are talking about the dol rule, when all of them want them to have exclusive jurisdiction. i agree with the side that says right now, the sec seems

incapable of getting the rules done. if you look at the principal trading exemption, they have had a temporary rule in place and we are now going on for eight years, it seems incapable of adopting. you want an illustration of the job they would do, there you have it very dol also covers nonsecurity spirit securities regulations apply to securities, but unfortunate, a lot of people whose iras are getting put into non-securities, often the most abused investments and retirement plans. >> what are these abuses you're referring to? >> some are put into gold or collectibles. you'll find a higher percentage of abuses, when someone's ira is put into those assets. >> regulated as insurance. >> can i just say, if the sec was able to move forward, if they did move forward, the department of labor is ready to

coordinate with them as much as possible. the two departments have a long history since they shared jurisdiction over similar spaces, though they have different underlying statutes and responsibility are there used to working together to the sec gave a lot of consultation to the staff on a proposal. the secretary had many conversations as well on this. the department stands ready and willing to work with the sec when and if the sec does proceed. >> at the same time, the dol should not be forced to wait. we have been waiting for 15 years? nothing to show for it. >> the mid 90s would identify the same conflicted payment scenario and the sec has been promising for decades to do something about it but has done nothing. >> of course, if you are a regulated company, it will drive you nuts. >> i represented the dealers and it drove me nuts. >> it drives me nuts we would do

this on a piecemeal basis and do what we have to do to come into compliance. >> i worked with the dol on rule makings, and there is an intensive amount of coordination between the two. a lot of sec people had exper expertise in arisa and vice versa. notwithstanding critics, what is going on and is still going on today, you can see in the proposal there was a very effective coordination as far as some issues we discussed in proposals. >> we have a loaded question from the audience i will read and try to modify a little bit. isn't this just another example of where the administration has overstepped its bounds, and we just have to wait for the course to overturn it? my modification of that is, is this regulation, when it comes out, likely to be the subject of litigation from the industry? what part of the industry is likely to litigate, and are the

courts, notably the d.c. circuit court of appeals, likely to tell the department of labor to back off? >> i would say the industry is making it clear it's lining up for a lawsuit and made allegations about inadequate cost-benefit analysis. it is standard fare for the industry. i have to ask whether they plan on suing. >> they'll certainly sue, given the strategy. hear something different in the closing remarks. on this one, i don't think they're going to win. the d.c. circuit hasn't even split between republicans and democrats. so the voting is different from what it used to be. >> i want to say -- i know we're short on time -- is this is a proposed rule, as i said before. currently, the way it is structured, it is not workable. it does not work for participants so they could get

the advising guidance that they need. if the dol would continue to work constructively with industries, and come up with a rule that ties back into the principles that sameera articulated before, the things they said would be necessary to put forth a best interest standard, i think we could get to a place that would make sense. the dol before this is finalized, they need to fulfill the requirements of a principle-based exemption. that's what we were told would happen before the rule was to come out, with the 450 plus pages. it is hard for me to see that as principal base. it seems like more specific and rule-based. i would encourage the dol to continue to engage

constructively with stakeholders and let us see exactly what they are thinking in terms of the proposed fixes, so we can all engage in a conversation and come out with a rule that makes sense for the end investors. protects them, obviously, that is important. requires a best interest standard but allows the products and services to continue and they can get what they need on their terms. >> i agree with pam but at this point, it's not enough for industry, and maybe fidelity is different -- pam and i had constructive conversations, and i hope they continue, but it is not enough for the industry to say it is unworkable. they need to come to the table in good faith and work constructively to ensure a final rule that actually works with those principles in mind. >> i'm hearing that's happening. it's encouraging to hear that people from industry are coming forward, are filing comments with the department of labor,

are talking to them, and offering their suggestions on ways to improve it. >> i would say it should not just be the industry. there are other stakeholders involved as well. i think all of them ought to be around the table. major regulators on the state and federal level as well, to make sure there is a coordinated approach that works across the spectrum. >> on that somewhat optimistic note, i'm going to end this. thank you all for coming and thank you for joining us. whether you agree or disagree with the panel thank them. [ applause ] >> wonderful segue here. i'd like to introduce as our final speaker, ken benson, president and ceo. floor is yours to bookend this discussion. >> thank you and, first of all, let me thank you for hosting

this important event on what is a complex but also extremely consequential matter. also, appreciate the views of the panel. i personally found them interesting. picked up tidbits about what my organization is going to do that i didn't know about. that's always good to learn. took notes on that. i'll make a few remarks. obviously, i had prepared remarks and made notes as we were going through. to respond to things brought up. i think there is some common ground. one thing i think we can all agree on is that americans aren't saving enough for retirement. more needs to be done to encourage smarter and better savings. if we take a snapshot of the market, our retirement market holds $24.7 trillion, up from $20.3 trillion in 2013. 77 million households reported they had employer-sponsored

retirement plans iras or both in mid 2014. iras made up 10.9% of household financial assets at the year end of 2014. at year end 2014 households had 9.9% in 401(k)s or similar plans, up 7% from 1994. and in 2013 about 8 out of 10 near retiree households accrued benefits in employer-sponsored plans to find benefit and defined contribution plans sponsored by private sector or government employees or iras. while we're moving in the right direction, we have a ways to go do continue to bollster the retirement marketplace. we need to make it easier and more accessible and avoid the steps to make it more difficult. the discussion today in our opinion is not about who is for or against the best interest standard. we believe it has been asked and answered. my members including

broker-dealers, asset managers all across the united states of different sizes, serving all types of clients who provide services in the retail institution market including commission-based and fee-based investment advisory services under the act of 1940, had the fiduciary standard of care for all investors not just the retirement sector. we endorsed it before dodd/frank. we made our position extremely clear in comment letters to the sec in 2010 2011, 2012, 2013 as well as to the department of labor back in 2011 i guess when that went in. further, while the sec has not acted you should the authority granted to them by congress, it is worth noting the conduct with respect to retail investors both in retirement and non-retirement accounts have migrated toward

the best interest standard. mercer noted that as well in his comments. the congressionally mandated regulatory organization which writes and enforces rules on beha half of the sec has been defining its rules in guidance related to 401(k)s and rollovers under regulatory notice to require brokers to put clients best interests ahead of their own. further, investor claims in arbitration routinely include a fiduciary duty component. i don't say this to argue we should stop here. rather to point out where we are today which often gets overlooked by policymakers but is already accepted by firms in their compliance officials. the debate is not if but how we should implement such a standard. in our vowiew, it should be consistent across the retail

market. that was addressed in a question floyd had from the field. it should be consistent with the -- in our view should be consistent with the intent that congress defined in section 913. our concern with the department of labor's proposal is not with its definition of best interest or as i stated we support that and it's largely where we are today. rather, it is the further conditionality and restrictions on investors that the department seeks to impose on top of and beyond that standard that we believe is extraneous, burdensome and ultimately in a practice inconsistent with the best interest of the client. the dol's proposed definition of who is a fiduciary is broad. encompassing many more activities than ever intended or that the department originally proposed in 2010. for example, the seller's exception for the previous version allowed brokers to market activities to retail customers. this time, there is no sellers exemption to retailmarket to a small

business owner. while there is an education exception to something a fiduciary, it is more narrowly crafted. under the current proposal one can no longer name any specific investments without the activity becoming a fiduciary activity. the department's mechanism, discussed, by which the rule would be business model neutral and allow for commission-based accounts, the best interest contract exemption, the bic or identify seen it as the bice, contains so many conditions and restrictions, that our members believe it is unworkable as drafted. with all due respect to the director, who i believe is quite sincere in his efforts on this proposal -- i truly believe that -- as drafted, the exception is complex and confusing, but it is certainly not streamline. this is material as the vast majority of iras, and for that

matter, all retail accounts, are held in commission brokage accounts. investors choose between commission-based and fee-based managed accounts. almost all our members offer both. investors have overwhelmingly chose brokage accounts including iras. the exemption which subjects firms to a legal liability was discussed, on top of the existing legal liability. limit investor choice of product in our view and propose level fees at the firm level and seek to set market prices, and require firms to develop new compliance regimes, some of which macon flikty conflict with existing laws. because of the increased liability costs firms indicates the safer course may be to migrate to fee-based accounts which are exempt from the rule. however, as stated, fee-based

accounts cost the investor more than commission brokage accounts. that is because the higher is associated with fee-based accounts. most firms limit it leaving millions with no options for advice or guidance. it was noted one of our fine members has recently put together a small balance account but it's a $50,000 balance. as one of the panelists noted, most iras are below $25,000 in balance. i think perhaps in addition the sec has questioned whether higher cost fee-based accounts are always in the client's best interest. particularly by hold investors which creates ss a conundrum. clients already made the choice of what they want to purchase, a choice they may be forced to lose. in the impact analysis accompanying the rule and the

previous council of economic adviser tud addystudy in support of the rule, a study we believe is seriously flawed including the $17 billion figure which we don't believe is supported by the research cited in the study. but in the study, the department cites the recent experience in the united kingdom through its retail distribution rule in support of the effort. floyd mentioned or a question was raised with respect to this. if you read the cited research with respect to the uk's rdr proposal, and this is a research commissioned by the financial conduct authority of the united kingdom as part of their post regulatory review that they do what it found was that more than 300 investors lost services from brokers because they set minimum accounts. 60,000 new clients were turned down last year. the cost of advice has gone up. in our view, the uk experience should be a warning as to the potential for unintended

consequences. in response to the panel's discussion regarding the comment process, and i appreciate that and we're very involved with that. i'll make sure to leave our flame thrower at the door the next time we meet with the department of labor. we had multiple meetings with them and talk to them regularly. even while we're discussing this back and forth frankly, our team is talking to them about prohibited transaction exemptions that have been in the works for years. years. on a regular basis. we have a regular dialogue with the good people at the dol. even when we have disagreements. with regard to the comment process, and we agree this is only a proposal. no question about it. it is a voluminous complex proposal, full of fine print and legalese, to quote a couple of the panelists, which i get a kick out of, having trained in ekconomics economics, having lawyers being concerned about fine print and legalese. nonetheless, it's also something

that everyone agree it is a proposal. seemed like on all sides it needs amending. we think it needs a lot of amending because it is unworkable, particularly the bic, as it is. the problem is we have to take into consideration erisa is an absolute statute. you're either in bounds or out of bounds with significant liable as a result of it. further more, the way it operates is not where mercer mentioned the issue with the principle transactions at the sec, take your point, it's been going on a long time. but it's not a situation where the department can, in a short-term basis, if the rule is not right, make a short-term correction and come back and fix it later. it's not right. it doesn't work. you can't do it. you have criminal liability. you have tax liability.

you have that until they get around to fixing it and doing the prohibited transaction exemption. as i pointed out earlier, we have been in negotiations with them on prohibited transaction exemptions on other rules out there for years. it takes a long time to move the process. in fact, the point mentioned on the account, the small balance account, $50,000 balanced account, is -- comes out of a rule that comes out of a 2006 piece of legislation that the rule was written in 2010. then it took from 2010 to now to get the product developed. these things can't just be done automatically. that is the problem. i take the point that we're in a comment period. we will certainly comment. our lawyers are looking forward to writing a multi-page comment letter. many a lawyers are. it's not a situation where we'll take the comments in 600 things we had problems with 198 questions in the rules we want answers to. then we'll come out with a

ten-page rule and 700 pages of guidance, prohibited transalaskas andtransalaska s -- transactions behind it. some stuff be work and some won't. it's like a statute. you have to live within it. that's where the firms say it's unworkable. as i said, in our view, it is not about being for or against the best interest standard. we believe the question has been answered. we are clear on our position in being in favor of it. i would also point out -- well let me get to this. the industry's position has been clear on that. it is how you do it. our view, the department's proposal is drafted goes far beyond such a standard to limit choice and raise cost and unnecessarily so, in our opinion. equally troubling, i think, is that this experience underscores a failure in the public policy marketplace. something that i think the bipartisan policy center is

interested in. not just in this area, but across the board. floyd got into this in the question. it's absolutely the right question to be asking. particularly in a forum like this. we are headed -- rather than adopting a policy progressty typrerogative for the entire market, we are headed to compliance and disclosure regimes on the same market par tis panticipants from different regulators. it's hard to see how investors won't be confused and the industry forced to build redundant systems that will affect cost. it seems illogical that we cannot address this in a uniform manner. with that, i appreciate your time. again, i appreciate the vpc for hosting this event. thank you. [ applause ] thank you. thank you once again floyd, and panelists. i'm not sure we have resolved all the issues that --

surrounding the proposed regulations. that wasn't our intent here this morning. i apologize to those who had questions that we were not able to get to. hopefully, we have provided you the audience and listeners out there, insights into underscored proposed regulations and their development and goals. i would encourage all those listening and those who are following this to participate in the regulatory process of submitting and getting your views and points in. again, thank you for coming out. we appreciate your attendance here this morning. thank you. [ applause ] c-span's 2015 commencement coverage continues saturday with four speeches, including fisa

judge susan wright at the university of arkansas. dreamworks chair at usc. mitt romney and george w. bush. here's a preview. >> you know when i mentioned this speech to some of my pals they were surprised i was going to give it. say i haven't given a commencement speech since leaving office. my decision is quite practical, so i got a phone call from my landlord. gerald turner. rather than raising around or threatening to hold our security deposit, i was relieved to hear president turner ask if i believed in free speech. [ laughter ].

[ applause ] >> i said, yeah. he said, perfect. here's your chance to give one. as a proud member of the smu community, i am honored to be here. truly honored. to deliver the 100th commencement address. >> see that and other speeches from recent commencements saturday at noon eastern on c-span. the senate will convene this weekend for a rare sunday session, following a week-long memorial day recess. they'll gavel in at 4:00 p.m. for legislative business. eight hours before the patriot act provisions are set to expire. they'll resume debate on the house-passed usa freedom act that would extend patriot act surveillance provisions and also make changes to the nsa's current bulk data collection program. now requiring the nsa to get a warrant and ask the phone companies for their records.

roll call votes on the bill could happen any time after 6:00 p.m. follow live coverage of the 00 p.m. on our companion network c-span2. here are some of our featured programs for this weekend on the c-span networks. on c-span, saturday, starting at noon politicians, white house officials and business leaders offer advice and encouragement to the class of 2015. speakers include former president, george w. bush and chair of dreamworks animation. at 9:15 p.m., former staff members reflect on the presidency of george h.w. bush. sunday at noon more commencement speeches from across the country with former secretaries of state condoleezza rice and madelyn. c-span book tv is in new york city, beginning at 10:00. live call in segments with publishers and authors throughout the day.

sunday evening at 9:00, on afterwards, a professor looks at a case which considered the constitutionality of proposition 8, rescinded the right of same-sex couples to marry in california. on american history tv on c-span3, saturday evening at 7:00 eastern a conversation with white house historical on first ladies who had the most impact on the executive mansion. sunday afternoon, just before 2:00, the life and death of our 20th president james garfield who served two decades as a congressman from ohio and assassinated 200 days into his term as president. get our schedule at c-span.org. the world resources institute release td ten-point plan for reducing greenhouse gas emissions this week at the national press club in washington, d.c. it outlines ways the u.s. can use existing policies and authorities to make emission

cuts while increasing economic opportunities. speakers include white house deputy director for climate policy rich duke and richard kauffman. >> good morning, everybody. my name is sam adams. i'm the head of the u.s. climate initiative for wri. the world resources institute. for those of you here in the room watching live stream online and the viewers of c-span2, i'd like to welcome you to our announcement and discussion of the findings of our most recent research, "delivering on the u.s. climate commitment: a 10-point plan toward a

low-carbon future." you can download the complete research report at wri.org/publications. about us, wri is a global nonprofit, nongovernmental organization that works closely with world leaders to address urban global challenges at the intersection of economic development and the natural environment. at the u.s. climate initiative program within wri we use vigorous independent research and strategic partnerships to help advance the united states transition to a strong, low carbon economy. and up front i want to thank the research team of the u.s. climate initiative that completed the study we are here to discuss today. and if i could have them stand. karl hausker, lead authors of this research study and the

rebecca and nate. thank you very much for your work. [ applause ] >> we are are focused on this issue because of the need to address climate change, and urgent need to address climate change since 1980. get both sides, since 1980, over $1 trillion has been lost to climate disasters in the u.s. since 2011 more than $200 billion in losses have occurred due to climate events in the united states. in march, of this year the united states put forward a serious proposal to slash its carbon emissions 26% to 28%. down by 2030. effectively doubling the speed of emission reduction compared to its last international pledge. if successful, not only will

this help mitigate climate change but the u.s. submission could offer real momentum to global climate negotiation, but only if it is a credible proposal. and that is the research that we undertook. we apliedy ediedy ediedy edied -- applied robust, independent analysis on whether and how the use of administration can deliver on its climate target. the scope of the research included looking at elements of the 2013 u.s. climate action plan come including the strengthening of cafe cafe standard, the proposed clean power plan and the proposed snap rules on hfc. we also looked at and we also researched and analyzed state efforts that are underway including the renewable portfolio standard, the energy efficiency research standards and market-based systems are putting a price on carbon in california and the nine northeastern states of reggie.

this work we're talking about today, this research work by the u.s. climate initiative builds on research that this team has been doing since 2003. and that >> i would like to note that wri -- a previous wri president is here. he has been instrumental in shaping wri into what it is today, and please join me in recognizing also a member of our board of directors swron than lash. jonathan. former u.s. climate initiative and wri staffers that deserve recognition as well who are here today. nicolas bianco, john larson, james bradbury, and stephanie.

thank you all for your work and now on with the program. soon you're going to hear from carl, who is going to give us an overview of the research findings, and that will be followed by panel discussion which will include q and a and discussion from the audience. not only will you have a hands to ask carl questions about the research findings but then you'll be able to engage in the deeper conversation with the panel. the panel will be moderated by susan goldenberg, u.s. environment correspondent for "the guardian" and will include panelist rick duke, deputy director of climate policy the white house office of energy and climate change, richard kaufman, chairman of energy and finance for new york, office of new york governor andrew cuomo john director of federal and international climate campaigns for the scare club, and mark wagner vice president of

government affairs for johnson controls. wri is live tweeting today's event at our wri climate account, and you can join the on-line discussion by using the hash tag low carbon future. sxwro all of my colleagues today. we addressed two broad questions in this study.

first is using existing federal authorities combined with state actions. what pathways could the u.s. take to meet that 26% to 28% production target set by this administration? the second question is looking beyond 2025 and assuming that new legislative authority is possible in future years what pathways could the u.s. take to move towards a low carbon economy in 2030 2040 and beyond? as sam noted, there's a wide rake of actions already underway. the u.s. will need to expand and strengthen some of the current and proposed policies already in the pipeline, and the u.s. will need to take action on some

emission sources not yet addressed. going beyond 2025 some pathways can get us there while maintaining a growing economy. we have pathways that have put a price on carbon combined with other complimentary policies and found that we could hit emission reductions of 40% or more by 2030. 50% or more by 2040. all consistent with good gdp growth and employment.

zoo take a net approach and a reference case level of sequestration. we relied largely on a reference case on projection from the 2014 annual energy outlook and other government sources particularly epa projections of the nonco2 gases. this means that our reference case includes various standards and policies that were finalized and in place before 2014. the reference case excludz proposed standards that are in the pipeline, very significant ones, of course, like the clean power plant. as you see in the figure, we have a historical 2005 levels of about 6,500 million metric tons and we look at current emissions of roughly 6,000 metric tons with fairly slow growth heading into the future.

by 2025 our reference case projection is a little under 6,400 million metric tons. to hit a target of 26% below that we would need to reduce emissions about 1,600 million tons below that number by 2025. what are the pathways explored that could hit that target? the first pathway we explored we call the coram business pathway. in this pathway we assumed that epa will implement the clean power plant as proposed and then we added the portfolio of other ambitious policies covering almost every other sector of the economy. when we ran that through our model, we could reach the 267% reduction. two other pathways we explored. the first we call the power sector push pathway. in this pathway we assume that

epa finalizes a somewhat stronger clean power plant or strengthens it over time to reduce emissions to a greater extent of the power sector, capturing some of that additional renewable energy potential and energy efficiency potential. that still remains even if they did the clean power plant as it's currently proposed. when we pushed harder on the power sector but maintained the other coram business assumptions, we could get as high as a 30% reduction by the year 2025. the third pathway we explored we asked could we also get to the range of 30% even with a clean power plant as currently proposed and there we pushed a little harder in four areas in transportation on both vehicle efficiency and travel demand, on industrial energy efficiency

and finally in natural gas consumption in residential commercial buildings and with that extra push in those sectors, we were also able to reach a 30% redux by the year 2025. when we ran the numbers out to 2030, we got in the range of the 34% to 38% reduction below 2005 levels. and the blue shading on this graph also just implies that these policies are scaleable. there's nothing magical about those three pathways, but you could mix a port foal wroe of policy that is we've examined to reach anywhere in there. where did the tons come from? in this figure we show the percentage capitol bugs by various sectors that we analyzed

contributing in significant slices. how do we get there? we've put together a ten-point action plan that can reach into the 26% to 38% range. it draez all sectors -- transportation, power, residential, commercial, industry. all the co2 emitting sectors. it also covers the non-co2 gas that is are unrelated to fossil fuel use. agricultural emissions methane n2o, and enhancing the sequestration in forest and soils. it's very significant to note

that we covered much of what's possible. we didn't cover that area, and it's very significant that just last month the administration announced the smart agriculture and forestry initiative, and they estimate they can reduce emissions about 120 million tons through that. there's different ways to reach these low carbon pathways including one sector that we didn't look into. so the ten-point action plan is covered in your executive summary. i'm not going to cover the whole thing, but let's touch on the three biggest sectors.

our first action full is to strengthen the power plant in the near term or over time to reflect that potential. second action point related affecting the power sector is to scale up the programs for residential and commercial energy efficiency. both of those combine to achieve -- the second sector i'll talk about is hfc's or hydroflora carbons. here when consumption is still growing relatively strongly as hfc's replace the ozone depleating substances that are causing problems. we know that epa is taking action already through its snap program and through rules that reduce hfc use in vehicles. our third action item is to

expand and continue these aggressive programs to reduce hfc emissions. then the third sector we talked about is industry. strong growth and emissions here is expected and that's good. there's a rebirth of u.s. manufacturing going on. abundant natural gas and a return to economic growth levels. that also creates potential for reducing these emissions. there is potential to tap into the kind of potential of the national academy of sciences as identified as possibly in the industrial sector. there's levers here. the epa has a broad clean area of authority to address industrial emissions. we also know that doe and states have programs that can spur reductions here as well. our fourth action item is to use that authority to set emission standards in the industrial sector and ramp up voluntary programs, informational benchmarking labelling to help improve industrial efficiency and reduce emissions from that

sector. >> eventually congress will have to become a part of this issue. lou tax mechanisms and cap and trade mechanisms and serious people both on the left and the right and both parties and business and environmental groups know that putting a price on carbon is part of the long-term solution. we know the carbon prices reduces emissions. we know it's also compatible with robust economic growth. why do we know this? because evidence from our experience in the u.s. with the two systems that sam mentioned as well as experience in other

countries. we also know it from independent and credible modelling of what carbon pricing can do and what its affect is on the economy. so we explored some carbon price pathways. >> we found we could reduce emissions increasing to 50% to 53% by 2040. those go beyond what we can do

simply with existing federal authority and state actions. the gdp and employment impacts of taking these paths show little impact in the near term and virtually no impact in the long-term. that's consistent with what other credible modelling efforts that have addressed these questions would say. we also find many some pathways and some scenarios, the combination of aggressive energy efficiency programs, even combined with carbon pricing can actually result in lower bills of residential sector and commercial sector and overall expenditures and that's consistent with some of the analysis that eia -- that epa did for the clean power plant. just to recap our key findings the u.s. has put out an ambitious target. it is achievable if we work hard. we can meet or exceed that 26%

to 28% goal. a lot is going on already. based on the 2013 climate action plan and other initiatives that have been announced since then we need to expand on those, strengthen those. we need to take action on emission sources want yet addressed, and we can get there. beyond 2025 those deeper reductions are necessary. carbon pricing is a key to reaching those deeper reductions, and we know that it can be done while still having a healthy economy. i'll stop there. again, thank you for coming. i'll take a couple of clarifying questions.

>> how do you zurnd our low carbon pathways to reach 26% to 28%, there's a variety of standard settings that would occur in different sectors under authority and epa or doe or other agencies. there would also be nonregulatory programs that would be financed by the federal government. >> with pipeline and natural gas industry, so many of these come in at negative cost or zero

cost. yes. >> my name is kristen. >> just in terms of the scope of what we were undertaking and the capacities we had at wri, we did not explore that area. yes. >> could you say a few words about what kind of a modelling framework you tuesdayed do this analysis? >> yeah. all the details are laid out in the report. briefly we have an internal wri model that can project emissions and we also used nems in collaboration with duke university, and i'll just take this minute also to thank atan boomerman at duke university and marilynn brown at georgia tech

both of whom helped us with the modelling. >> we'll have more q and a after the panel discussion. thank you. [ applause ] >> she is the u.s. krbt for "the guardian" and is based in washington d.c. she's known as a touch insightive reporter. she has won several awards for her work in the middle east and in 2003 covered the u.s. invasion of iraq from baghdad.

>> for those of us that live in this space, it's been busier than ever because of, you know, the prospects of the paris climate conference the idea that we can now be -- we are now very close towards reaching a very important deal on -- a global deal on climate change that could indeed limit warming to two degrees celsius which is internationally agreed safe limit for global warming. it's a very busy year on climate change, and i'm so excited that we're here with some of the people who are really in the thick of things here.

>> i'm going to be bringing up the pablists now and starting with rick duke who works on energy and limt change at the white house, and who is deeply involved with every aspect of president obama's very ambitious climate plan that was rolled out two years ago. we've got coming in at the extreme left we've got carl. just strictly at the left of the panel. there's no -- it's just a placement issue.

>> they're involved with car batteries and changing the way we live and it also determines whether we get to this phase. we have richard kaufman chairman of energy and finance for new york state. you've heard about california being a leader on green issues. well, new york is doing a lot too, and we'll hopefully get the chance to hear from him and we've got rick duke, as i said, and here besides me is john cookett, who is director of federal and international programs at the sierra club and who has been monitoring talks at paris and also the actions here by government and industry. >> i'm going to take my place in the middle of the panel.

i thought with that great -- there's so much sort of gloom and doom also in this space so it was great to hear from carl that we -- that, you know that there is a very clear path for the u.s. to reach its climate goals, and i wanted to sort of start off with you, rick, and sort of ask you how. >> how can the white house act now to defend what's being accomplished so far and what more can we expect to sort of move towards that clean energy future? >> thank you, suzanne. good morning, everyone. i think it's important just to step back and set a little bit of context about the president's action on climate change over

the course of the two terms. when you go back to the beginning of the first term, at that point in time our emissions were projected to grow indefinitely through time and instead of accepting that, the president said an ambitious goal to cut emissions 17% by 2020, and then started a whole series of actions in the first term to deliver those results at the beginning of the second term he came forward with a strong statement on climate change and his inaugural address followed shortly thereafter by the historic climate action plan in june of 2013. what we're seeing is that poll after poll shows that americans support strong action. it's delivered during the first term appliance efficiency standards, double electricity during the first term, and a

whole suite of other measures that are in motion under the climate action plan are cutting energy waste they're saving consumers money, and they're delivering both carbon pollution reduction and public health benefits. our intention is to continue acting, continue to deliver what we promised under the climate action plan and hit our targets accordingly. we think the public is with us. >> it's important to recognize to make steady progress across all greenhouse gases. in that sense it's a diversified approach. we have fuel economy standards hfc's related action methane

related action the efa's clean power plan cutting energy waste, scaling clean energy, and delivering consumer savings and these public health benefits and economic growth at the same time. so any one of those measures may be subject to one challenge or another, but we'll continue to proceed with the progress across all those different measures and we're confident they'll be successful. when you look at the specific question around litigation, here i think it's important to recall that the environmental protection agency has a multi-decade track record of success in important public health projects like cutting particular matter. 80% reduction in sulfur dioxide and yes there was litigation. there was a challenge to what epa was doing over that period, but ultimately they've been successful and the economy has

continued to expand robustly, and we've delivered those public health benefits. we think we'll see similar success going forward on key elements of the climate action plan. >> you think that the administration can embark on it now in the time remaining to get to that 26% to 28% target? >> you have to choose one or two on that list. >> i think it's important to note that it's already a ten-part list in the report. the tenth on the list was the one that i would mention because as carl indicated, that was sort of the everything else bucket. we noticed that secretary vilsack to drive down emissions

in the agricultural sector. programs and voluntary efforts, and probust engagement in the agricultural sector. we see. >> every opportunity that we can pursue and we expect to complete a very robust set of measures on our remaining launch, and i think the secretary of agriculture's leadership is a good example of what can be accomplished. >> john, when -- as someone who followed the progress of the talks, when are you in the court at these various venues, i hear people saying we're not sure

that the u.s. can really deliver. based on what you are hearing from the white house, based on you know, the wri plan, are you confident that the administration can deliver on these goals? >> that's a tough question. so i think what we see here and what we see you know, rick speaking to and where the administration is, i think that they have absolutely the commitment that is required to achieve the targets that they've set. i think it's important when we take our steps back and look around to see the incredible opposition that exists and the potential for delay there is not small. i think that countries should recognize that every country has their own national circumstances. every country has their political problems that they have to overcome. the united states is no different from any other country on that front. we've seen in the recent elections in the u.k. challenges there as well.

i guess my reaction would be the u.s. is negotiating in absolute positive and good interest. they have no intention of putting numbers on the table that they don't think can be met. they also put on the table robust standards and really difficult goals to achieve, and that's what everyone wanted from the u.s. there's? question on the table as to whether or not these goals are achievable and the question is to whether additional legislative authority is required to meet them is a good thing. i don't know how many people remember the intensity based targets of the bush administration and then they would go to the cops and just roll out you know, slick looking things like this that

just recounted all of the good work that the states were doing. so we're in a very different place now, but we continue to have a lot of challenges in front of us, and i think any country evaluating where the u.s. is just has to recognize that. >> it's one of the things that in the lead-up to the paris climate talks we're hearing about the importance of the business sector in reaching these goals and getting a strong agreement. how important is it to see strong direction from the administration and on climate issues and how does that help business? >> i think leadership is critical, and being able to follow through on any of these things and read success. we're a global company, and when i look at these recommendations, i find we're deeply involved in five of them as a business.

our industrial usage. we're looking at what our emission from our factories we've committed to 25% reduction ten years. halfway through that we're already .1%. it is achievable. batteries all over the world to reduce emission from vehicles in the electric fiction of the

vehicles. there's any number of points in here a lot of the policies are driving a lot of this technology. >> in the automotive and in terms of cars. >> exactly. we mentioned, again, our batteries. yes, we make lithium ion batteries for hybrids and electric vehicles, but we also have been making in europe a lot of what's known as start and stop where once you put your foot on the brake, the engine shuts off and reduces the idleing time. europe has been at that for quite some time. at least 60% of new cars in europe.

>> looking at the vast majority of vehicles still being produced year over year 0% of vehicles are still internal combustion engine. a start-stop vehicle can reduce emissions and fuel economy by 5%. that's a huge chunk if you can start to tackle the new car fleet that's still out there. >> richard how engaged have people of new york state been in this issue? especially in the wake of -- how big a priority is it? what kind of shift have you seen in public opinion in the u.s. state in regards to climate action? >> one of the things i'm concerned about is we're here from the federal government and here to help. actually, one of the great things about 111d is that states have a tremendous amount of latitude in terms of how to

implement the proposed rules. it's a very good -- we really appreciate that at the state level because states really as judge -- justice brandyce pointed out they're in the lab of democracy and there's a range of policy innovation going on at different states. he with can talk a little bit about what we're doing. governor cuomo actually called me right after sandy because i was working in washington, and he said the electricity sector is still operating in the vinyl record days in the ipod. not just in terms of resilience but in many residents. while limt is an essential part of what we're trying to do in

new york state it's -- and kind of the good news here is there are lots of other reasons why we're embarked upon a significant change in our power sector. we not only have been on a path that is sustainable from an environmental standpoint, we're ont a path that's xlekically sustainable. we pay high cost for electricity in the state and while generation costs have moderated because of the benefits of natural gas, the cost of transmission and distribution continue to go up. that infrastructure costs an aging infrastructure lots of places in the united states have aging t & d infrastructure. we spent $17 billion in the last ten years, and it's going to go to $30 billion in the next ten years. and that's -- and we're building -- or not building the

kind of grid of today or tomorrow. we're building -- rebuilding the grid of yesterday which is a grid which has very, very low capacity. we have a system which is both energy inefficient and capital inefficient. there was a question before about who is going to pay for all this? well, actually we have a pretty meaningful cost that can be used to finance an energy system which is going to be more energy efficient, save customers money and actually be more resilient. >> new york state will not allow fracturing.

how does that if at all, work into your energy picture your energy use picture? >> well, so -- that was a recommendation by the public health commissioner, so i'm not going to really talk specifically about that decision. what i would say generally is that it's very important to think about an electricity sector that is not a purely a production based system because that's what we have today. we have a system that -- electricity system. we talk about one of the key pathways here was attacking the power sector. the power sector still is built this largely central station generation distribution system is -- was -- was built at a time when electrons only flowed one way, and when demand was seemed to be fixed so today is 85 degrees, tomorrow will be 90

degrees. we have to generate power based upon that forecast of the day forward. close to what the technology of today permits companies like john than controls and others actually will permit a network grid that is a little bit more like when we think about the i.t. system that's a network where we have the benefits of the mainframe and the cloud but combined with the flexibility of pc. that kind of network grid is the kind of grid that we should be building, which is a combination which gives the benefits of the central station plus the benefits of distributed energy resources in supporting the grid and making the grid more capital efficient. >> in terms -- what would you tell people on the decision on

fracking? >> the point that i'm making is that we want to have a system which better matches supply and demand. >> that's the key element of our policy. >> the idea was that we would -- it's a pretty full grown that we would let people in the audience direct questions and i'm going to let that process sort of start off fairly -- right now if people want to put up their hands. i would ask you to wait until the microphone reaches you until you ask your question and if you start off by identifying yourself, your affiliation and indeed asking a question instead of making a