We can get straight to their testimony. First, peter snyder, president of a grnlg company which i visited before. Thank you for being here peter. Peter is the leader of Financial Services providing income Retirement Savings options and insurance to millions of americans. Mr. Sflieder became president and served before that as the executive Vice President for primerica. We welcome you here today. Thank you. We have some scott purit managing contractor of defiance i. R. A. In maryland. He is a retirement director. A masters degree from harvard university. Welcome and thank you for being here. At this time, id like to turn it over to the rank and member frank and introduce ms. Miller. Thank you mr. Chairman. Its my pleasure to introduce Darlene Miller who is joining us today from my home state. Ms. Miller is the president and ceo of Permac Industries in burnsville minnesota, a Manufacturing Company that provides precision small part machines to other industries. Permac was named the u. S. Chamber Small Business of the year in 2008 and in 2010 ms. Miller herself was named by the Burnsville Chamber of commerce as the business person of the year. Ive had the good fortune of meeting ms. Miller in 2012 when we toured Burnsville Senior High School together to discuss the importance of s. T. E. M. Education. Ms. Miller, thank you for being with us today to discuss how you can best meet the needs of your employees. Thank you mr. Chairman. Growing up in wichita, bob has become a notable figure in the economics community. He brings a balance perspective on this issue and he has been an xrve and private public and government sectors. His list of accomplishments, employment and memberships on Advisory Boards reads more like a collection of several highly accomplished people rather than one man. I thank you for taking the time to come before this committee today to provide a Vice President that unfortunately seems to be lost, if not solely ignored in this conversation. We hope you can offer us some solutions on how webb offer those benefits in regards to financial retirement and riempt living. If all the panelists would limit comments to five minutes. Thank you very much mr. Chairman. And thank you also senator robins for that fine introduction. Turn your mike on. Its that switch there. So im thanking everybody again for their kind introductiones and so forth okay . And senator roberts, i dont want you to choke on these words, but im a lifelong democrat and a former Clinton Administration official. Well that doesnt bother me one [ expletive ] bit. Okay. But i say that because i come from a background where i was in administration where we care deeply about the kind of goals that the department is pursuing in this proposal, but i want to respectfully disagree with the way the proposal has been outlined. And im going to make three quick points. Number one, the correctly estimated benefit of labors proposed rule do not outweigh the costs. This is because labor gives absolutely no credit or assigns no value to human Investment Advice. Namely encouraging clients to avoid trying to time the market. One of the worst decisions a longterm investors can make. And also helping clients rebalance their portfolios over time. When these factors were taken to account, my colleagues and i come to the conclusion that rather than generating 4 billion in annual benefits for investors, it would produce net harm of roughly 1 billion to 3 billion annually depending on how many brokers are induced by the proposal to no longer serve the i. R. A. Future market. In fact, during a future down turn, dr. Singer and i estimate that by causing many current accounts to be uneconomic to serve, the rule cocost investors as much as 80 billion, double the tenyear benefit estimates claimed by d. O. L. I should also mention this connection, that the 17 billion number thats been thrown about by the cea estimate in our opinion, is flawed. Its base odd a flawed reading of the Academic Studies and we show this in our report. In fact, not even labor counts on the 17 billion. They only use a 4 billion figure. And even that figure, we point out, is incorrect. Thats just important to keep in mind. Now, word about robo advice because i know its coming up. I think its an important addition to the market. I think we have to be careful about drawing too much of a conclusion from online or text messaging. While robo advisers can several help identify asset allocations or products to consider, an email or text message during a market route is not an adequate substitute for a human being on the other end of the telephone reminding investors of the clear evidence that it pays to stay put if youre a longterm investor, which by definition Retirement Savers are. Number two, my second point if you lose your broker, the only other source of human advice youre likely to go to is somebody who is providing advice on a basis of a fee which is the percentage of your account. We show in our account that investors choose that option theyll end up paying more than they do under the current regime. This is for small investors. By the way i want to underscore something about small investors. Secretary perez started his testimony talking about ads 506,000 account. That is not a small saver account. There are millions of people here, and i think senator warren pointed this out, there are tons of people that have account balances of 10,000 or 20,000 and thats all theyve got. For those people, brokerage is a less expensive forum of advice than a r. A. P. Fee. That is a if you will fundamental fact. Third, and my last point, the notion that all Retirement Investment Advisers should be held to a best interest of client standard is not controversial. So lets just stipulate that as far as im concerned. Its the way we enforce it. Should we endors force it by potentially a class action litigation or by a body that we have established to oversee the brokerage industry . In fact, my bottom line suggestion to cut to the chase for d. O. L. Is what they ought to do is go back to the drawing board and go to fenra and theyve offered comments saying the rules are workable and, in fact, a lot of broke remembers going to leave the market. What labor ought to do is go back and figure out a way to administer a best interest rule that you could enforce. And, by the way, if the problem is insufficient disclosure about who is getting paid and how theyre getting paid there is a simple solution to that. Simple exposure. Just put a great big bold warning on the front of the document that says who is getting paid and how much. The only basis and then ill conclude, mr. Chairman. The only basis for rejecting that idea of disclosure was one study that the department cited that is based on Experimental Evidence not on real world market evidence. Im telling you, if i was in the government and i propose to my superior or secretary, whoever it is, that we ought to completely up end an entire industry on the basis of experimental study, i probably would have been told to go back to my office and find another job. So there is absolutely no basis, in my opinion, for at least at a minimum not trying better disclosure. Before we go ahead with this massive undertaking. And so i think that concludes my testimony. Thank you very much. Mr. Chairman, ranking chairman and members of the subcommittee i appreciate being here today. Please allow me to tell but primerica. We were founded almost 40 years ago on a central mission. That middle income families require someone to help them focus on their financial needs. That was true then and its just as true today. And we feel like at primerica weve made some headway. We ensure 4 million lives with our term life insurance. This year we will pay 1. 2 billion in death benefits to families. Those checks which we deliver every day and well deliver multiple checks today keep a personal tragedy from becoming a financial one. Weve helped our clients save almost 50 billion in our investment accounts. Most of our accounts are very small, by industry standards, but theyre hugely important to the families who open them. Investment choices with us are very simple. And appropriate for our market. We do no individual stocks, do no options no commodities. Mainly mutual fund and annuities. You cant buy google from us, but you can buy 700 mutual funds from Top Companies bylike invesco and lake me sa. Our clients Household Income is between 30 and 100,000 a year. Theres usually two parents working in those homes and, frankly, all too often the homes are headed by a single mother. We strongly believe in Retirement Savings and our clients have opened 1. 2 million i. R. A. S with us. You can start with one primerica for as little as 50 a month. But even that amount is hard to find in the families that live paycheck to paycheck. What we sometimes say is they have too much month at the end of the money. We provide facetoface help from licensed representatives who live and work in the communities. These representatives begin with education. They teach the fundamentals of how money works. Dollar cost averaging time in the market emergency cash accounts. Thats all important. And oliver wyman study just released found it advised individuals accumulate 38 more assets than the nonadvised and at 865, they have 114 more. Our clients benefit from our presence in their financial lives. Comment letter was submitted by shelly rosen, one of our reps. 15 years ago, she sat dunn with a Railroad Worker and his wife. They had a lot of debt and no savings. And they were very generous. So generous that they ran up debt on credit cards buying gifts for their friends. We helped them teach them other way toes gep be generous. Today theyre debt free and fmly independent. The department of labor rules will stop shelly rosen from helping folks like that railroad engineer. The proposal subjects our client interactions to the prohibited transaction rules in erisa in the irs code which effectively make the brokerage model chosen by 98 of accounts under 25,000 illegal. The department tried to write an exemption in the best contract exemption, but its so complex, so onerous, so costly, its unworkable. They attempted to make it principal based but instead introduced uncertainty which makes the exemption unusable in a word of erisa where theres strict liability. No firm we know of intends to use it. That makes this rule more punishing than the one that was withdrawn in 2011. Prior testimony, the department of labor suggested these robo advisers will fill the gap and help the millions stranded by the rule. We disagree. Our Company Believes in biorhythms, not algorhythms. They need a person not a personal computer to navigate a financial landscape unfamiliar to them. They worry about a mistake and they wont hit the send button. In the households we serve there is a struggle going on. Its not between investment a, b or c. Its a fight between savings and spending. A fight to put an extra 50 away. We all agree we must act in a clients best interest. But inadequate Retirement Savings is the overriding issue facing the middle class and this rule is another obstacle. Dont doubt the d. O. L. s good intentions, but its such an important issue, Everyone Needs to be involved. And we look forward to working with everyone and were glad the senate is involved with this issue. Thank you very much for listening to me. Thank you. Ms. Miller. Thank you, chairman isaacson and Ranking Member franken and thank you for the kind introduction. Members of the subcommittee on employment and Workplace Safety and members of the full committee. I am here representing myself and my employees and also the chamber of commerce of which i am a board member and i chair the u. S. Chamber Small Business consults. Permac opened in 1966 and i purchased it in 1993 and 94. I started with seven employees. We now have almost 30 and were looking to expand. In order to expand my company must be able to compete with much Larger Companies for talented employees. And one way were able to do so is by offering Employee Benefits including a Retirement Savings plan. And as an owner of a business, i am very focused on the details of my core business function and i use outside professionals to help me with supplemental business functions. For example, i use a cpa to assist me with tax issues and attorneys assist me with legal issues and a Financial Adviser to help me with my Retirement Savings plan. And in 1999, permac implemented a sarsep now known as a sepi. R. A. The plan was recommended to me by an adviser who i had worked with previously to provide medical benefits for my employees. And several years later, my adviser advised me that i was in danger of violating the 25 employee limit for a sarsep. So at that point i worked with limb to determine how to continue to provide Retirement Benefits for my employees. We decided a 401 k plan was the best option for my company and in 2008, we implemented that plan. We have a 96 enrollment rate in our plan. Almost all of our employees participate in that plan. Of the eligible ones theres only one who is close to retirement who does not participate or a couple that are parttime are not quite yet eligible. Under the 401 k plan, employees receive a matching contribution equal to 100 of their first 3 . That they contribute and 50 of the next 2 of contributions. Also and just as important is permac provides substantial Investment Education to all of its employees. I look forward to continuing to provide competitive benefits. My current employees are like family to me and i want to be able to help them, especially with the retirement. Just as importantly, i wanted to be able to attract new employees. 82 of our association p. M. p. A. Precision Machine Products association say that they also need to be able to provide this benefit to their prospective new employees. I am very concerned that the proposed rule will impact our ability to do so. Last week, the chamber submitted a comment letter to the department of labor enumerating many ways in which the proposed rule is unworkable. In my testimony id like to highlight three issues that will have a particularly negative impact in Small Business plans. First, the sellers carve out discriminates against Small Businesses and will decrease access to much needed guidance. Under the proposal, there sa carve out for the advisers that are selling or marketing materials. However, that carve out does not apply to advisers to Small Businesses. The do. L. Seems to believe that Small Business owners, such as myself, are not as sophisticated as Large Businesses and, therefore, need additional protection. When i work with my Financial Adviser, i am aware that he is providing a service for a fee and sell a product. I wouldnt be able to run a successful business if i was not able to understand when im involved in a sales discussion. Second the changes to the education carve out will restrict access to Investment Education for both Small Business owners and their employees. My employees really, truly value the Investment Education provided to them specifically providing investment recommendation and various asset classes. This information allows them to make informed Investment Decisions and many of my employees could not afford to pay for this Investment Education separately and might be discouraged from investing in the plan at all if my company did not provide this benefit. And third, the best interest contract exemption will increase the cost of services to Small Businesses. And possibly eliminate access. Theres some question about whether advisers to Small Business plans are even able to use the exemption. Even assuming that they are, there are certain to be additional costs associated with these changes. As a Business Owner who relies on outside professionals to help me manage my plan any additional costs imposed by the regulation will be pass theed on to me. In conclusion, im very concerned that the proposal will not achieve the departments goals of better protecting workers and retirees but will, instead, make it harder for Small Business employers and employees to Access Financial advise and increase retirement services. Thank you for the opportunity to testify before you today. And i look forward to any questions you might have. Thank you ms. Miller. Before we move, i want to apologize. Senator roberts and i both have a Committee Hearing which involves nobody on the did i as, i might add. Shoot. We have the be there. Shoeg im going to turn over the rest of the hearing to our athing chairman but Ranking Member al franken. Good grief. Unprecedented. Good grief. Mr. Acting chairman, i dont know what to say. You again. May i help you . Okay. Just go right to mr. Keerns. The department of labors proposed conflict of interest rules. Im scott puritz, cofounder and managing director of rebalance i. R. A. My firm is a registered Investment Adviser with approximately 275 million with assets under management and we serve approximately 500 clients. We lal i. R. A. As is a relatively new national advisement Investor Firm that provides real human beings with low cost highly diversified portfolios for Everyday Americans. Investment committee at the yale the billion dollar Corporate Pension fund. Rebalance i. R. A. Embraces a fiduciary Legal Standard and we always put the interests of our clients front and center. This new generation of firms is offering retirement investment advises to clients at all income levels for modest fees. A group of innovators provide firms such as my own, but also includes established industry players such as vanguard and schwab. This trend of retooling the Financial Service industry is about three years old and has met with considerable success in the marketplace. Tens of thousands of clients have switched over. This group of investment innovationers is growing very fast and manages over 15 billion in plan assets. Imagine what would happen if there was a level playing field. Imagine. These investment innovators have three common features. First, we Harness Technology to make the process more efficient. Second we harness new investment models and typically the best of three proven endowment style investing portfolios of low cost efs. A rebalance i. R. A. The plans seek our help because they need advice about how to manage their Retirement Savings and how to better understand the increasingly complex world of investment products. Our clients come from all walks of life, nurses, School Teachers plumbers lawyers, welders, professors police, firemen, Government Employees regular americans. Were in the marketplace every day dealing with Everyday Americans as they struggle to find the best way to manage their retirement investment savings. If you will we see how the sausage is made. And sometimes sometimes, frequently, it is not a pretty sight. Over 30 of our clients come to us directly from having, for lack of a better phrase, a sub optimal relationship with a Brokerage Firm. The story we see over and over again is all too familiar. A client at a Brokerage Firm who is stunned to find out that their socalled trusted retirement Investment Adviser does not have a fiduciary responsibility. In addition, the vast majority of clients are surprised, shocked, to discover that there is almost always a second layer of fees at the Investment Management level which frequently adds 1 or more to the fee burden. The brokerage refugees that we see at our firm average 2. 37 of fees, all in, per year. Now, that may not sound like a lot of money but over several decades, that extra fee burden can eat away at over half half of a consumers retirement nest egg, over half. One rebalance i. R. A. Takes on these refugees as clients of our firm, we immediately reduce the investment fees rupture by an average of 8 . In addition, we put together a comprehensive Retirement Plan and provide our clients with best of breed endowment style, retirement investment portfolios and finally, we pair all of our clients with a highly qualified twoperson real heartbeat retirement investing team. American inventiveness and the entrepreneurial spirit are alive and well in the Financial Services industry. But for all consumers to reap the full benefit of this extraordinary, truly extraordinary surge of innovation who needs to be three things. Greater transparency, greater flow of information, particularly regarding costs and a greater alignment of economic interests. The Financial Services industry and provide Everyday Americans with a fundamentally cheaper and fundamentally better way to save for retirement. Its time to hold all Financial Professionals accountable by consistently requiring them to act. And establish a level playing field. Americans struggling to save for a dignified retirement should no longer be subjected to the conflicts of interest and if the traditional Brokerage Firms cannot live by a simple fiduciary standard and conserve moderate savers, so be it. Other firms who embrace the client first approach mr. Puris i would ask you to wrap up the. All income levels to prepare for a secure retirement. Thank you. Thank you. I will be here until the end, so i will go to senator warren. According to the best available data data that are not paid for by the industry, this costs americans about 17 billion a year. The department of labor has proposed a rule that would put a stop to this Retirement Savings drain drain drain. The department of labors rule and i think these are your words, complex and burdensome. And you said that one thing that is, quote, critical to your success is that primerica always operates in its clients best interest. I was interested to read a news report this morning that outlines lawsuits brought against your vis advisers in florida. According to the article, at least 238 firefighters teachers and other career Public Workers who were near retirement age accused your company of providing bad advice that drained their Retirement Savings. And you did it by advising them to move their Retirement Savings as a guaranteed pension into private investments. Now, primerica was poised to make a lot of money but only if you could convince florida firefighters who are near retirement age to cash out their guaranteed pensions. So, mr. Snyder i just want to understand your companys advice in these cases. Do you believe that people like these firefighters from florida who are near retirement and have secure pensions with guaranteed Monthly Payments should move their money into riskier assets with no guarantees just before they retire . First of all senator warren, i appreciate the promotion. Im actually the president of the company, not the ceo. Okay. And im familiar with the matter of which you speak. And it doesnt have any application to the rule before the committee because in that particular case, none of those individuals were clients of primerica. Whoa, whoa. They paid us no compensation. Wait, wait. Lets stop right there, mr. Snyder. The article didnt say the workers were your retirement clients. It says you gave them bad advice. And here exactly is the quote. Once these workers retired and moved out of their government plans, primerica agents stood to profit from managing their retirement assets. Had they stayed in the pension programs retirees would have simply collected their Monthly Payments, leaving nothing for primerica to manage and no commissions for primerica agents to harvest. Now, my question is not how you were paid. My question is whether you think it is sound Investment Advice to encourage Public Employees to move their money out of their pengs and into riskier assets with no guarantees just before they retire. Senator in that particular matter regulators looked at that and found the firm acted properly and stop right there. The question is not about regulators. The question is is it legal to do that and thats exactly the problem weve got. It is legal to do that. And i think thats what the regulators say. Its legal. My question, once again is about the advice that primerica agents gave. Is it a good idea for firefighters on the front edge of retirement to move out of a guaranteed benefit plan that was going to cover them for all their lives and move into a risky investment that would make a lot of fees for your agents . You know, each situation is really very different. If you were in a defined benefit plan and youre sick, what happens is in the state of there are, for example were you to retire and then die two or three weeks later you would no ability to leave your money to your loved ones. So its very im sorry are you suggesting that these 238 people were weeks away from dying and thats why they all got this advice . Well senator, this the courts dismissed those cases and, frankly, this illustrates one of problems because its not illegal activity. I think weve established that, mr. Snyder, that no one broke the law. The question is whether the law should be changed. It illustrates one of the issues with the rule because were here to talk about the rule. One problem with the rule is as a everyone in the Financial Services industry knows, especially after the financial crisis, you can be sued, sometimes appropriately but also sometimes frivolously. And under the best interest contract exemption, youve entered into a contract with the client and they can sue you and you can lose the benefit of the exemption. So you not just i understand, mr. Snyder, that zorpt toyou dont want to be sued. I totally get that. But the question i keep trying to ask is whether its generally a good idea for workers like firefighters and teachers on the eve of their retirement to move their money from guaranteed defined benefit plans into riskier assets. Let me ask you that question, mr. Puritz. Youre the managing director of rebalance i. R. A. You have a large investment firm. Would you advise 50yearold, 60yearold clients to cash out of a defined benefit pension plan and move money into an i. R. A. Managed by your company . As a general rule, the answer is no. Okay. So youd say no. Why not . In a traditional pension, a defined benefit plan there is safety and predictability. My answer would be different if it was a defined contribution plan. Thats not what we have here. We have a defined benefit plan that guarantees that these people are going to be covered for their entire lives. Is that right . So theres a lot of research around this, i understand. Are there circumstances in which it is a good idea for someone right on the threshold of retirement to move from a defined benefit plan that will protect them for the rest of their lives to a much riskier plan . There are circumstances but theyre very rare. Oh you so you would describe them as very rare. Im going to say, i took a look at the research on this and wanted to get more Expert Opinion on this, and it seems to me the research is pretty clear. Alicia menell from Boston College said, and ill quote her, only those with serious illnesses who believe they do not have much time left should even consider cashing out a defined benefit pension and even that isnt obvious because as she puts it even sick people may live longer than they think. So mr. Puritz, let me ask you one more question. Do you think it is and i want to use the correct quote here complex and burdensome to offer advice that is in the best interests of the client as primerica claims . I didnt think so. So, frankly, the suggestion that its too expensive to provide people with sound Financial Advice is ridiculous. Millions of Financial Advisers do it every day. Hard working americans like the florida firefighters and teachers who devoted their careers to protecting the public and who were targeted by primerica shouldnt have to worry about whether their Financial Advisers are planning to get risk by playing roulette with their commerce Retirement Savings. The department of labor is working to fix its problem. Thank you, mr. Chairman. Thank you, senator. Mr. Puritz in both your spoken testimony and your written testimony, you refer to something called a brokerage refugee. I think that someone who fled a brokerage and had a bad experience, i guess, right . Okay. It was mentioned in your written testimony testimony, i was recommended by a broker she inherited from her family. How do the services you provide and the fees you charge under your duty as a foo do you rememberary differ from those that this woman experienced with her ip hearted broker . What does that mean for Retirement Investors nest egg . Or their ability to retire after after. She literally means raising the microphone to your lips or to your mouth not to your lips, but how is that . You can turn the light on. Push the button. Thank you. There you go. There we go. Senator, thank you. Thats an excellent question and really gets to the heart of this matter from an economic point of view, from a return point of view. And the example that we cited with a client, were talking about an extra fee burden. Charlie ellis, who is a member of our investment committee, has a phrase, he says the dirtiest word in finance is only 1 . We think of 1 as whats the big deal . We paid 15 for tips, 20 if youre generous. 1 sooens seems inconsequential. But in the scenario that we run into consistently with clients who come from brokerage relationships, that extra fee burden is 2. 73 . And if you trend line that out over 30 years thats additional or thats what theyre paying . Thats what theyre paying per year. In the current environment with plenty of lower comfort alternatives its really unnecessary fee burden. And is that compounded . They compound exactly like the return. And over time, the give you an example. The someone had 100,000 and they ran an all growth stock which historically is returned our magic number is 7. 2 a year. Is that number in a tax deferred account, that account would double every ten years. So in the 30year time frame, it becomes 800,000. A considerable wealth creation. By contrast if you reduce that down to 5 , which is really the fee delta that we see in the marketplace marketplace, its for half the amount of money. Its a doubling of the return. Okay. So how are you able to provide your service at such a lower my come pewtations 32 of 2. 37 is about 0. 75 . Thats correct. How do you do that . We use technology to make everything productive. Its low cost etf index funds. Is that what was called disparageagingly robo . Robo is a phrase for a new generation of Investment Advisers who use technology. Now, there are some advisers who are 100 computerized and thats where the term robo comes from. And they are theres some very successful ones that is the Market Leader and theyre targeting millennials and people in their 20s and 30s for whom theyre familiar with working. Theyre familiar with computers. Their retirement is a relatively small part of their overall looifr. Their whole career is ahead of them. By contrast theres other firms such as personal capital and my own firm rebalance i. R. A. Where we have similar investment philosophies and similar use of tenl technology, but we have real life Investment Advisers who deal extensively with clients and match them with the right asset allocation, low cost underlie ing underlying portfolios and discipline managing. Did that answer your question . I have a lot of questions, but well submit them for the record and we will keep this open. I didnt come here thinking i would adjourn this so when i say well keep it open for a certain period of time, and i imagine is that ten days, anybody . Ten business days. I was right. I was in the majority at one point. So thank you all for your testimony and this hearing is adjourned. Investment a. Officials warn this week that it may have to close some of its hospitals in august if Congress Fails to address the current budget shortfall. Veterans Affairs Secretary bob mcdonald will testify before the House Veterans Affairs committee about the v. A. Budget. Live coverage starts at 10 00 a. M. Eastern time here on cspan3 cspan3. Later in the day, a House Communications and Technology Subcommittee will look at broadband Infrastructure Investment in the u. S. Well hear from former s. E. C. Commissioner jonathan adelsteen and google fiber cities director michael singer. Live coverage begins at 12 30 eastern. An artist who took up china painting and carried the interest to the white house, establishing its china collection. She was interested in womens issues and helped raise funds for Johns Hopkins university on the condition that it admit women. And she was the first president general of the daughters of the American Revolution until she died in the white house from tuberculosis. Caroline harrison, this sunday night on cspans original series, first ladies examining the public and private lives of the women who filled the image of first lady from Martha Washington to michelle obama. Sundays at 8 00 p. M. Eastern on American History tv on cspan3. Up next with a conversation on islamic extremism in the middle east and around the world. Well hear from the author of temptations of power, islamists and liberal democracy in a new middle east. The American Enterprise institute hosted this event. Good morning, folks. We have a full agenda so even though not everybody is here, were going to just allow people to filter in and start our conversation. Good morning, everybody. I am donnie plekae at aei. Im delighted that were doing this conference. The title is islamic extremist, reformist and the war on terror. But that doesnt begin to cover the conversation were hoping to have. The prove nance of this event is an interesting one. Michael rubin and i were sitting in our office talking about issues and the challenges that we face in Foreign Policy and domestic policy. And we have both been struck by the skasty of these issues. The policy combinations have been dominated by people on one side, neither of whom i believe represent the mainstream of thought or frankly, suggest reasonable or good policy options for how to deal with straumist streamism in the middle east and the threat that it poses domestically. There are real issues to talk about whether they are here within islam whether theyre u. S. Policy and so thats the conversation that we really hope to have. Were looking to shed light and thats one of the things that the American Enterprise institute does best. I hope youll join us in being part of that. Im not going to introduce the panels. Theyre roughly divided up. Were going to talk about some of the issues in the region and some of the religious questions in our first panel and then were going to talk about policy options in the second panel. But as usual, everybody is going to talk about what they want. The one thing that i want to remind everybody is that what we will have a chance for q a the way we do our panels is in a much more informal way. Were not asking everybody to give a presentation up front. Even though were sooi seated behind a did i as because we cant figure out how to put the chairs in the right place, this is intended to be more of a lively conversation than it is series of lectures. If you have any comments afterwards, let me know and let me turn things over to michael rubin. Thank you all for being here. Thank you very much danny. Id like to introduce the first panel and then we can get right into it. Im thrilled to be on a panel with three friends. Jennifer brice and i went to college together. We continued studying together in yemen, although jennifer had a far more advanced level than i was. She has since worked in Guantanamo Bay and most recently, shes been at the zefer institute, which is right nearby Stanford University and jennifer is one of the experts i think, with issues relating to internal reform. Next to jennifer is shadi hamid who i oftentimes have to debate on the diane reems show. Shodi is one of washingtons leading experts on the Muslim Brotherhood and is thought very very deeply about issues of reform, issues of extremism what is extremism and so forth. So i welcome him. And, of course shodi is at Brookings Institution just up the street and soon to be nern enterprise institutes in a minute neighbor. Abas is a native of iraq. Hes one of the best connected americans to the internal religious debates inside nedjef. At the same time, abbas has while he is a senior fellow at Johns Hopkins, he is founded in washington indispensable institute for shiite studies. I want to start with a basic question. We often talk about how straum needs a reform. What exactly is a reform in the what is reformism is in the islamic context . Id like to start by rejecting the concept of reform. I dont find it helpful. I find language of revival, renewal, and development more helpful and lets look very recently at the chattanooga shooter. His problem was he was disconnected from the very rich and complex tradition of islam. So i dont like to i dont like a different word. You dont like reform and i dont like reformation. I feel like this word, we have been hearing more and more of it and theres a New York Times best seller that has that word prominently in the subtitle. So i mean, part of the problem there is this idea that we can apply concepts that were specific to christianity and its evolution to a different religion, islam. And this idea that we almost assume, like theres this liberal determinism that all societies, cultures and peoples will ultimately end up at the same endpoint, the end of history, if you will, its a matter of how long it takes and how to get there along the way. In a way its sort of paternal paternalistic and patronizing. Why should muslims necessarily you know there was that big debate that im sure a lot of you saw with bill marr and ben affleck. I think a lot of us were maybe not, i dont know but a lot of us were cheering on ben affleck. But when you looked at the substance of what he was saying it was problematic even though that must have been our instinctual feel to say, oh, good. He was essentially saying we all want the same things, that muslims want to eat sandwiches, too. And he actually said that eating sandwiches as if and, you know we all want to raise kids and have good jobs and all of that, which is all fine, but you can want to eat a sandwich, but still believe that islamic law should be central in public life. You can want to eat sandwiches and believe that the punishment should be implemented. And thats where i think it becomes challenging. But anyway, the point there is that it may be that islam and ill just put this out there and we can get back to it. What if islam is uniquely resistant to secularzation . Then what . Im going to push back on one question, actually and ask you for clarification. When you see huda punishments, for the wider audience the hadud punishments would include stoning adulterers cutting off the hands of thieves