>> Susan: -- policy.

And I'm delighted to welcome all of you here
this afternoon on behalf of the Ford School

and the International Policy Center.

It's a great honor to have Senator
Chuck Hagel with us in Ann Arbor

to deliver the Ford School's 2009
Citigroup Foundation lecture.

Just last week, we were very pleased

to welcome Nobel Prize winning
economist Paul Krugman to campus.

And, for us, to have two such
prominent visitors within a week

of each other has just been
wonderfully exciting.

And we are, again, thrilled to
welcome many of you back to join us.

The Citigroup Foundation lecture
series was made possible by a gift

from the foundation several years ago
in honor of President Gerald R. Ford.

And we're extremely grateful for the
foundation's generous gift which enables us

to bring such distinguished policy
thinkers and leaders to our campus.

Senator Hagel is one of the nation's
most important and influential voices

on international affairs and on foreign policy.

He's currently a distinguished
professor at Georgetown University

and the University of Nebraska at Omaha.

He is also chairman of the Atlantic
Council and a member of the Secretaried

of Defense's Defense Policy Board.

He's the author of a recently publish
book called "America: Our Next Chapter."

Senator Hagel stepped down from the
United States Senate in January of 2009

after serving two terms representing
the state of Nebraska.

While in the senate, he was a senior
member of three key committees:

The senate foreign relations committee; banking,
housing, and urban affairs; and intelligence.

Before running for senate, he had a very
successful career in the private sector.

He was president of McCarthy and Company, an
investment banking company in Omaha, Nebraska.

And, in the mid-1980s, he co-founded Vanguard
Cellular Systems, a publicly-traded corporation.

Senator Hagel's thinking about foreign policy
has been informed by his own combat service

in Vietnam where, as a 21-year-old enlisted man,

he spent the year of the Tet
offensive leading an infantry squad,

and he earned two purple hearts
during this time in Vietnam.

Throughout his career in public service, Senator
Hagel's voice has come to represent the sort

of politician who can reach across the aisle.

His time in the senate and his work since has
been characterized by civility, moderation,

pragmatism, and a non-ideological approach
that enables him to forge partnerships

on issues that matter to American lives.

He's also been very generous with his time
for us already and we're very grateful to him

for what I understand was a lively

and informative discussion
with some of our students.

I couldn't be more pleased to welcome
Senator Chuck Hagel to the podium.

[ Applause ]

>> Senator Hagel: Thank you.

[Applause] Susan, thank you.

I'm grateful for an opportunity to be here.

I want to thank Citigroup as you have
already noted in your introductory remarks.

Of course, the University of
Michigan and the Ford School.

I know it probably wasn't a simple
or easy suggestion to take seriously

that you would invite a cornhusker to
this great state, this great university.

Although, we do have a couple
of things in common.

One is Jerry Ford.

Many of you know that he was born in Nebraska.

We take some credit for shaping
him, molding him.

[Laughter] He picked up his
bad habits in Michigan.

[Laughter] But, nonetheless, we're as proud of
Jerry Ford and Nebraska as you are in Michigan.

We also share another common interest,

and that is that we were the co-college football
national champions in 1997 which we shared.

I -- I know you believe we were not worthy
of that recognition; but, nonetheless,

those who were far wiser than
any of us made that selection.

And I recall getting on a plane at Andrews Air
Force base at about 6:00 o'clock in the morning

after the polls had come out, and those
polls had suggested there was a split

in the -- in the two champions.

One poll giving Michigan the national
championship and the other Nebraska.

And I was with then your junior senator
Spence Abraham, and he did not speak

to me the entire way we were -- I
think on our way to -- to China.

But, nonetheless, I did what I could and acted
in a rather civil way, not that he didn't;

but nonetheless, you try to inform
your colleagues as best you can.

I want to particularly thank the students
who are here, not just because you are here,

but more as to why you are here -- your purpose.

And it has nothing to do with me.

It has everything to do with you as you are
preparing yourselves and you are absorbing,

not just what great institutions
have to offer like this institution,

but you are widening your horizons and
you are widening your lens as to engaging

in a -- a new dynamic challenging world.

And I, after this afternoon's opportunity to
spend some time with some of the students,

am fortified in my recognition of -- once
again, of this generation for you will inherit

as probably an exciting time in the
world for mankind as there has ever been,

not without problems, not
without significant challenges,

but you will have an amazing
capacity to deal with those challenges

and truly make a better world for all people.

I also wanna recognize the
two senators from Michigan.

Carl Levin and I have, over the years,
forged a -- a very strong relationship.

As you know, your senior senator is the
chairman of the Senate Armed Services Committee.

He presides over that committee

at a particularly important time
in our country and in the world.

And I know the president, the
president's team will continue

to rely on senator Levin very much.

I've always appreciated Carl Levin's style,
his outreach, his -- as you term "civility."

He has always been the kind
of senator we need more of.

I'm gonna talk about that in general
when I address President Ford

in more specific terms here in a moment.

Your junior senator has been
adjusting very well to a --

a pretty fast pace over the
last couple of years.

You have two United States
senators, in my opinion --

although they are not of the same party
I am -- that you can be very proud of.

They work hard.

They know the issues.

They're informed.

They do what they believe is right
for their state and their country.

And I don't know how much more you
can ask of your public officials.

And they conduct themselves.

They conduct themselves in a way
that you can -- you can be proud of.

I wanna begin my thoughts
today with a Gerald Ford quote.

And I came across this quote as I was
finishing a book that I read twice.

It's -- it was a paperback.

And many of you, I suspect have read it.

It's called "31 Days."

And it is about the 31 days from the time Vice
President Gerald R. Ford assumed office --

assumed the presidency and
when he pardoned Richard Nixon.

That "31 Days" is quite instructive.

And, if you've not read this
book, you should read it.

It -- it's -- it's quick reading.

But it tells you an awful lot
about this man called "Ford."

It tells you about what he put as first on
his agenda of priorities, how he saw his job,

but also more importantly how he saw himself.

And we all know -- each of us in our lives
-- and our students here will know this more

and more as they ascend more
and more responsibilities --

the central dynamic of anything in
life is -- is being true to one's self.

You compete with yourself.

You don't compete with anybody else.

There is competition.

But, in the end, you compete with
yourself and you answer to yourself.

And, in the end, when you take an inventory
of -- of your life and what you've done,

what you've not done, the mistakes you've made,

right decisions you have
made, it is all about you.

And you and only you are accountable.

Now we can make excuses, we can
blame other people, influences

and forces outside of our
control but that's life.

That's life.

But this man from Grand Rapids
was particularly instructive on --

on two principal areas, what I've always
believed to be the two indispensable requisites

for leadership, the two indispensable
requisites for life.

And they are character and courage.

And, without those two qualities,
you really don't have much.

And I don't believe you've
got much at all in a leader

if that leader does not possess
both of those qualities.

And I'm gonna read just a very brief
quote from the book on what Ford said

about his decision to pardon Nixon.

And it is, of course, a very small part of
the prelude that leads up to the last chapter.

But it's instructive, as I said, about the man.

And this is the quote: "As president, my
primary concern must always be the greatest good

of all the people of the United
States whose servant I am.

As a man, my first consideration is to be true
to my own convictions and my own conscience."

End of quote.

Well, I think that says an awful lot about
Gerald Ford; and, he, in fact, lived that.

He didn't just say that,
and it wasn't an excuse.

And because of that action he took -- and
historians are still working through that

and historians will still be writing
about that in -- I suspect in 50 years.

And everyone has their own opinion on that,

whether that was the right
thing or the wrong thing.

But he fully appreciated what he
had set in motion when he did that.

It was very unlikely that he was
ever going to be elected president

of the United States and he recognized that.

He could've deferred it.

He could've let it go to trial.

He could've maneuvered to after an election

to ancillate himself from
that but he didn't to that.

He hit it straight on, straight
up, and honestly.

And, again, you'll make your own
decisions, come to your own conclusions

on whether it was a right decision or not.

I believe it was a right decision; not
for Richard Nixon, but for the country.

And because in the end Gerald
Ford said you have to be true

to your own convictions and your own conscience.

And that's the way he saw it knowing full
well the consequences that were coming.

In a world that we live in today, which
is as complicated, as interconnected,

as combustible as it's ever been with
very little margin of error, a world of 6

and a half billion people as soon to
arrive at 8 billion, character and courage

and wide studied leadership
are required more than at --

I suspect -- any time in the history of man.

Now I haven't been around for all of it,

but even as the United States
senator I read occasionally.

And I don't know of a time quite like this time.

This is a time that requires Ford
statesmanship like never before.

This requires a weaving into our process,
into our politics, into our decision-making,

into our national character, into our
leadership, into the optics that the world sees

of us, forms an opinion of
us based on their optics.

Not our optics looking out but reversing those
optics and so the people of the world look at us

and say, "What kind of a country is this?"

We have great issues to define.

We have great issues to settle.

We're engaged in great debate today
over two critically important issues.

One is the future of health care.

You will decide where you come
down on this as -- as you should.

But make no mistake this is one of those issues
that has very significant long-term consequences

if for no other reason, then we have entitlement
programs in this country called Social Security,

Medicare, and Medicaid that are
essentially unfunded and will go unfunded.

And, for these young students
sitting out here today,

they will be required to finance these systems.

And the latest JO numbers over the next
75 years on these three programs alone,

the unfunded liabilities that those
programs represent they are now in law,

we're obligated as citizens, as a
government to fund those programs.

If no more programs, new programs are in place,

over $50 trillion in unfunded liabilities
is what those three programs represent.

Now that means that we have obligations of
over $50 trillion over the next 75 years

that we don't know how we're gonna pay for them.

We don't know where the money's coming from.

Health care is the core of that.

So this is a big debate.

This is an important debate.

And, if we would've had in the middle of
this debate, as it starts to wind down,

a Jerry Ford -- someone who was always
focused on building a consensus to government,

building a consensus to reach an objective --

there are partisan difference,
philosophical differences.

There should be.

There should be alternatives
and you debate those out.

But you do it with a certain
responsibility knowing that you need

to arrive at an objective at some point.

Some consensus must be built.

That means some compromise must be built.

The pressures that are now on
institutions of self-governance are immense.

Those pressures are more significant than in
any time, I am sure, in the history of man.

And those pressures come from the outside.

They're political pressures.

They're uncontrollable pressures.

They're media pressures.

They're -- they're pressures
that come on leaders

and on issues and on events from every side.

All politicians, all leaders,
leaders of universities,

leaders of any institutions
have so much capital.

You have so much capital
that you will use to lead.

Because, if you're leading, you're not going
to have agreement on every issue all the time.

And there will be those who will question your
leadership or your decisions and that's okay.

But that -- that political capital is finite.

You -- you use it up.

So today, as we see the institutions of
self-governance try to find a solution

or at least some accommodation or some
resolution to some of these great issues,

we're finding that we are essentially paralyzed.

It is a raw, partisan, political
paralysis that has struck our system.

Whose fault is it?

Well, it's -- it's everyone's fault.

It's the democrats' fault.

It's the republicans' fault.

It's our citizens' fault.

It's not the fault of the system.

It's not the fault of the process.

It's our fault.

Leadership does matter.

Leadership matters.

And, at a time when our nation in the world
requires steady, strong, wise leadership,

I fear we are failing ourselves as we see a
political system constantly debased and defined

down to the lowest common denominator
of negative political campaigning.

The leaders, the politicians have
to take responsibility for that.

Those running for office, the candidates
need to take responsibility for that.

It's not good enough to say, "well, gee,

I didn't know my television guys were gonna
put those -- those adds on against my opponent.

I didn't know that."

Come on. Of course, you did.

Accountability, responsibility.

We have drifted -- I fear -- in -- in a
way that we have come loose of our moorings

in a standard of expectation in our leaders.

Jerry Ford never let that happen.

He never let that happen.

Now Jerry Ford was not perfect.

No one that I've ever met is.

We all make mistakes.

These are big issues.

You can't defer the big issues.

You can't study them and then
come back in a year or two

and say, "Well, maybe we'll try this."

Second big issue that's going on in
Washington today is President Obama

and his national security
team's analysis of Afghanistan.

What should we -- what should we do?

It is my sense that what's going on now is --

is the wisest, the most responsible
course of action.

If for no other reason, then it's
critical important to question assumptions.

What are the assumptions here?

Is -- is this a -- a campaign against terrorism?

Against insurgency?

Is it counterinsurgency?

Counterterrorism?

Is it nation building across southern Asia?

How do we factor in Pakistan which surely
is connected to anything that happens

in Afghanistan and certainly
the future of Afghanistan.

What real threat does that present to us?

Is the smart, wise way to do
that to bog down large armies

in historically complicated
areas of the world or not?

The point being to review your reference
points, review your larger frame

of reference as to why we're there.

Today marks the eighth anniversary
of our invasion of Afghanistan.

Within six months, our time in Afghanistan
will surpass the two longest wars America has

been in.

Vietnam has been the longest.

The American Revolution was the second.

Right now Afghanistan is third.

In six months, Afghanistan will be the longest.

It may be right.

It may be wrong.

But where we are is where we are.

So the president taking time to try to work
through this, to try to find the best solution

and resolution and policy for our
interests and all the collateral interests

that always encompass these -- our role in
the world, how people see us in the world,

the region -- this is a tough area of the world.

On one side of Afghanistan, you have Iran.

The other side you have Pakistan.

It's the convergence of three nuclear
powers all along the same border

with Iran emerging as a power
-- a nuclear power.

This is very dangerous obviously.

And, to take time and work through this, in my
opinion, is the -- is the right thing to do.

But this analysis and this working
through the process cannot be done

without some consensus among our leaders
-- democrats, republicans, independents.

That we have a common goal, we have a common
responsibility, we have a common objective;

and that is to find some consensus
as to where we go in this effort.

And, when we debase a system and -- and we
minimize the importance of the political process

and we lock ourselves in the cul-de-sacs
of raw partisanship, that both sides --

the right, the left that essentially
have dominated our two political parties

in the process over the years --
say, "no, there is no compromise."

And you see the battle lines being drawn now in
the congress of the United States essentially

between the two parties on -- on this
issue of whether more troops are needed

or less troops are needed or where do we go.

That's not the way you fix a problem.

You -- you can't fix a problem
when you destroy the process.

I rode in on the plane this
morning with Tom Friedman.

He was going to Grand Rapids.

I'm glad you didn't go.

I'm glad you stayed here.

He was speaking in Grand Rapids this afternoon,
and I think all of you know who Tom Friedman is.

And, if you follow his columns in the
New York Times, you have probably noted

that over the last month, he has written three
columns on exactly what I'm talking about;

and we talked about that on
the plane ride in to Detroit.

And, just to prove my voracity, since I --

I once was a politician so there's some
questioning about that, I produced a couple

of copies of his column to,
in fact, show him that I --

I was intending to reference him and
the subject matter of those columns.

And we had a long talk about it.

And as Freedman is around the world
and, I think, one of the best thinkers

in the business today -- and you can't be a
good writer without being a good thinker --

his contributions continue to become important
as others; what David Brooks, for example,

the conservative voice on the Op-Ed page

of the New York Times this weekend
talked about this issue as well.

He talked about it in a more
narrowly focused area of talk radio.

That the talk radio people consume
a certain amount of that air time

on just continually ripping
down the individuals.

Now I've always thought that these talk radio
people are so brilliant with all the answers

that it's unfortunate they don't
run for president themselves or --

or not to deprive America of their great
leadership because they are so smart.

But I -- I -- I've never found
one that actually does that.

They're good at criticizing everyone else.

And, as I said, debasing the man or the woman
who actually, as Teddy Roosevelt once talked

about -- who actually is willing
to subject themselves to the arena.

It's not easy to run for office.

It's not easy to be a leader.

It's not of any institution.

But much credit should go to those who are
willing to expose themselves and put themselves

out on a firing line and take the
criticism and take the hits and --

and it's easy for the other guy to stand out of
the arena and point fingers and make fun of him.

That's not how we change the world -- this world
that Jerry Ford helped produce, his generation

and his service to his country anchored much
by his time here at the University of Michigan

as he developed traits and characteristics
and expectations of his country and his system

and of himself, World War II, and then
went into elected office, public service,

and the House of Representatives and then
president -- Vice President, president.

He, in his generation, essentially built
a new world order after World War II.

And that World War II -- post World War II world
that world order was built around what I refer

to as "coalitions of common interests."

They built institutions --
all imperfect, all flawed --

but they built institutions that were anchored
by and centered around common interests.

United Nations, NATO, general agreement on
terrorists and trade which is now WTO, IMF,

world bank, dozens of multilateral
development institutions,

banks all built around that common premise

of you define your relationships
based on your common interests.

You do not -- you cannot define relationships
based on differences, if for no other reason.

And those differences -- and we have differences
and we're gonna continue to have differences.

You will never ever get to a point
where you can resolve the differences

if there's no relationship
based on some common interest.

That there's not a platform high enough
up to deal with those differences.

Those great leaders after World War II, which
Jerry Ford was one of them, understood that.

They understood it very, very well.

And that world order worked better than any --

any world order for that period of time
with more people on the face of the earth

than ever before -- than ever before.

Now we're over 60 years passed the
time that world order was structured.

Institutions must be relevant, leaders
must be relevant, you must be relevant

to the challenges, to the issues,
to the realties of your day.

And so there is always a
recalibration of leadership,

of institutions to make those
institutions and that leadership relevant

to those challenges, to those threats.

NATO is a very good example.

After the implosion of the Soviet Union in
1989 and everything that came as a result,

the question was: Why do we need NATO?

There is no longer a threat of Russian tanks
rumbling down the folded gap in Germany.

What's the point?

Might as well disband NATO.

No more threats in the world.

Well, we -- we've now come to
understand that wasn't quite the case.

Really and throughout history
never has been the case.

There's always been a threat.

And there will be more threats.

And there will be threats that these young
students will be dealing with that all

of us sitting here today cannot yet conceive.

Just as I suspect, most people in the 1989,
1990, '91, didn't think a lot about terrorism,

didn't think about the insidiousness of that
extremism, what that does to malign religion

and -- and use the good things
in the world to manipulate people

for any lend that we know is happening.

We know it's real.

We know there are people out in the world today
that wanna destroy civilization or societies.

Total intolerance.

That's real.

That's not manufactured.

And what, again, we're doing today
in Washington is trying to figure

out what the smartest way to
do this -- to deal with this.

But what Jerry Ford and his generation
also taught us is you can't do this alone.

There isn't a challenge that faces mankind
today and the United States and every state

and every country, every group of
people that is not interconnected.

Every challenge that faces
us is a global challenge.

Take the inventory.

Proliferation of weapons of mass
destruction, pandemic health risks.

A swine flu we don't know where that goes.

Swine flu is just a blip as to
what could happen in the world.

They don't know any boundaries.

Environmental issues.

The need for 6 and a half billion
people to have water, to have protein,

to have food, energy; extremism, intolerance.

We need not look beyond the current situation
as we work our way out of the worst global --

global financial crisis since
the Great Depression.

It washed over everyone.

It started here basically but it hit everybody.

There was -- there was not a country,

not a person in the world untouched
by this global financial crisis.

So we -- we are now all citizens,
truly citizens of the world

as well as citizens of our countries.

And there's always going to be a premisable
false choice in this in that somehow you give

up your sovereignty or you give up your
American standards or your American --

we'll call "values" if you want to
be part of that global community.

No, not at all.

That isn't the choice; never was the choice.

The reality is we will, I suspect, for some
time to come -- I don't know for how long.

We will still all be part of a
global community of nations, states,

of boundaries, of sovereign countries.

But also we will all be part of a larger
component of interconnected interests

and institutions that only those
interconnected institutions can deal

with these great issues because
there are no boundaries.

And it affects us all in the same way.

All in the same way.

Ford also understood that -- that
the basic common denominator values

of all people don't change.

Now I've not been to every country in the world.

I've been to a lot of them
and met a lot of leaders.

And I have yet to ever meet a group of people --
and you can catalog it, measure it by religion,

by ethnicity, by region, by
culture, by societies, by tribes --

to find that one of those groups loves
their family more than the other groups.

Or one of those groups has
the high road of morality.

The rest of them are immoral.

No. No, the fact is all people have a --

have the same kind of human
instincts about each other.

Now they manifest it differently.

African tribes and their traditions certainly
manifest their affections and their realties

and their leadership of their communities
differently than we do as a democracy

in the United States, but that
doesn't change the basic fact

that they dismiss the human
dynamics of respecting their elders,

respecting their people, their rights issues.

Women's rights that are different
than what we believe.

And we must understand that in order
to deal with all these differences

and accommodate these differences that we --

we have to show those same common
denominator elements of what we value most --

respect for others because we -- we
appreciate and certainly demand respect.

Your opinion is as good as my opinion.

You're no better than I am.

I'm no better than you are.

Just basic tenets of civilized intercourse.

We can't impose our values,
our standards, our realties,

our form of government around the world.

It will not work, never has worked.

And so as all these people are elbowing each
other in the world today for these resources

and how are they going to survive and
how are these leaders of China and India

and other emerging countries
gonna provide for their people.

And our standards are as probably as high
a standard as -- as there is in the world.

Here in the United States.

Our expectations of our job market,
expectations for our young people,

expectations from our government.

And how are we gonna accommodate all
that with all these other issues?

Well, it's wise, steady, careful leadership.

And make no mistake.

The world does value what we
say but don't always agree.

But the world is also watching
us very carefully.

There was a time -- certainly, for
the first 50 years after World War II

when the United States did not have to be
particularly cognizant of a reversible optics.

Our world pretty much was because we were
the richest most powerful country on earth.

No one was close to us other than the Soviet
Union having more nuclear missiles than us,

but everyone was fairly confident that
insanity would not prevail on either side.

That, that nuclear balance of
power, that deterrent value

of nuclear weapons was what it was but the
fact is there isn't anybody in the world

that did not understand that the United States
was the most dominant, powerful nation on earth.

And so we really didn't have to care
much about the optics on the other side.

Our world was through our
optics, through our lens.

How did it affect us?

It's a different world today.

But, again, the false choices, it doesn't mean
we're gonna be weaker or have to be weaker.

It doesn't mean we have to lose power.

Because China is ascending into a
significant power we're not gonna stop that.

The smart way to work with China or any
other country is -- is to find partnerships.

We want China to do well.

We want India to do well.

We want other nations to do well if --

if they define their conduct and
behavior on international standards.

And that's why it's always good to have
them in these institutions like the WTO

and others; organizations like that.

These countries represent markets.

And the more these countries prosper the
more they are invested in their own country,

the more they're invested
in peace and prosperity.

And the greatest threat of all to all of us --

which, again, Jerry Ford understood
very clearly -- is instability.

It's not terrorism.

We'll deal with terrorism.

It's instability.

When the world is unstable, when people are
locked into cycles of despair and hopelessness

and there is no dignity, then there isn't much.

And people are capable of doing
a lot of different things.

And they are easy prey for those who would use
these other forms of governance, of philosophy,

of religion to turn that on organized society.

And Ford understood that.

The world is defining itself today in a
way that we've never ever seen before.

The rate of change in the world that's
going on today is unprecedented.

But you don't need to go much beyond.

Just take the Internet.

How the Internet has changed
the lives of everyone.

And I don't believe we're even close to taking
it where -- taking this where it's gonna go.

It certainly has changed politics.

Look what Barack Obama did with the Internet.

The Internet is now in a position
to replace much of the functions --

function and many of the
functions of political parties.

You can raise money on the Internet.

You can define your candidacy on the Internet.

You can communicate on the Internet.

You can coordinate on the Internet.

You can do everything on the Internet.

Used to be you needed a political
party to do that.

You don't -- you don't need
that necessarily anymore.

Barack Obama took the democratic nomination away

from Hillary Clinton using those
techniques as much as anything else.

This is a powerful, powerful new tool.

Now the bad guys know that
too but that's not new.

Every advancement of technology
for man is out there for the --

for good guys to use and bad guys.

We just have to be smarter about it.

All these things are changing the
world order that we can't control.

The G7. There is no G7 anymore.

Now it's what?

G20. Why is there a G20 and no longer a G7?

Don't like each other?

I don't think so.

The reason there's a G20 is
because the 20 largest economies

in the world are now the economies that are

in the best position to deal
with these great issues.

And even the largest 20 economies
in the world aren't big enough

to deal with these great challenges.

So -- so we -- we are sailing
into a different kind of world

than we've -- we've ever been in before.

That does not mean -- mean that -- that we
somehow lose our ability to lead the world

because there is no country out there.

If you take the middle east --
the Israeli-Palestinian issue.

Take any big issue.

Uncertainty of North Korea or Iran.

Without the United States leadership, there
-- there will be no prospect for resolution.

Now we can't impose peace in the middle east.

We can't impose anything but we can lead.

We can bring consensus.

Just what I was talking about earlier
about in the congress of the United States.

Consensus to do something about health care.

To make it better, accessible, affordable,
quality health care for all our people.

Worthy cause I think.

I don't know if anybody would
disagree with that.

These are the kind of things that we
now have to frame up as responsibilities

of our government, of our leaders.

And I think it is going to take
a higher standard of expectation

for our leaders; what we
demand from our leaders.

And we as citizens have to also
take some responsibility for this.

We can't just blame it on the politicians.

Politics reflects society.

Politics doesn't lead, it reflects society.

Politics and politicians respond, we react.

Now how well we react and how well we respond
and how well we lead that's a different issue.

But politics is the process that we use.

And, if you destroy that
process then there is no roadmap,

there's no way to fix problems
because the result is chaos.

The result is -- is not being
able to structure a system

to define the problem and then fix the problem.

Well, I want to -- before we get to questions,
because I'm especially interested in hearing

from our students, I want to make
one -- one more general comment.

The world that we live in today
-- whether you like this world

or not -- is the world that we have.

And with all the challenges, with all the
responsibilities and all the real threats,

there's another element of this larger frame
of reference that occasionally gets missed.

And that is the capacity that we have to
not just deal with these great challenges

but to actually do something about them.

I don't know if there's ever been
a time in history -- I doubt it --

when one nation has had so much capacity,
productivity, technology, culture, societal,

every measurement of a country, every
measurement of a society, wealth, resources.

Never has there been one country with so
much capacity to do so much good for so many.

The only limitation we have is ourselves.

If we are not wise enough and bold enough to
fulfill that potential, history will mark us

as maybe the greatest failure ever.

And I think of the 3500 votes that I cast
in the United States senate in my 12 years.

I didn't cast a vote -- or Jerry Ford's
25 years in the House of Representatives.

I didn't cast one vote for -- for today.

That day that I wrote I certainly
didn't cast a vote for yesterday.

Everything was about tomorrow.

We can control to some extent tomorrow.

We can define to some extent tomorrow.

We can do something about tomorrow.

And with all these resources and all this
capacity, we are limited only by ourselves

and the leadership to fulfill that.

And this is not just a -- a political issue.

This is not just a political leadership issue.

Every institution in this country -- you start
with the great universities like this one is

and this school that -- that helps develop these
young minds but more importantly helps promote

and instill the energies and the
passions and the beliefs and the decency

of these young people to go
out and make a better world

because after all that's
what public service is about.

There's no other way to -- define
and describe public service

than making a better world
for all people -- period.

That's it.

All those tools that we have
to do that are right here.

Right here.

And that's the most important part
of where we go in all of this.

With all the issues that I talked
about and you know about --

all the things that we've got in
front of us these are all manmade.

These are all manmade.

Manmade problems have manmade solutions.

Things that god did, nature does don't
always have an easy, quick manmade solution.

But we made the problem, we can
fix it, and that's where we are.

And that's the great challenge,
I think, that history will record

when history starts to reflect on this time.

And I don't know of anyone who has been more
integral or central in setting a standard

for our country by his leadership, by his
character, by his courage, by who he was,

by the fabric that he helped weave
in this country than Gerald R. Ford.

And, for that reason and many more, I am
particularly proud that I would be invited today

to share some thoughts with you and to
certainly recognize what President Ford meant --

meant to all of us.

And I also wanna say to the instructors
and our teachers, professors --

which some now classify me in that group.

I am certainly truly unworthy of that.

But, in fact, my brother Tom, who
was in Vietnam with me in 1968, is --

is a real professor if you consider
law school professors legitimate.

But -- I just joke.

He thinks I have set back American education by
generations by being allowed to have anything

to do with young people and classrooms.

But he's always been quite envious of me.

Most of you have had brothers like that
or sisters and you know what that's like.

But I wanna thank the teachers, the
professors who are at this every day.

You know, in the Chinese culture, the
greatest profession of all is teaching.

And why is that?

Well, this wonderful 5,000 year culture
of the Chinese understood long ago

that teachers influence the world and the
outcome and personalities in people more

than any other group of people except parents.

And, in many cases, the teachers
are more important than the parents.

Unfortunately, when young
people don't have parents or --

or parents that don't pay attention,
it is the teacher that we look to.

It is the teacher that we always rely on.

It is the teacher that we take for granted.

So, along with our students
and our administrators --

but I want to also thank our
teachers for what you continue to do

and especially do at this school.

Thank you very much.

[ Applause ]

>> Susan: Thank you very much, Senator.

Senator Hagel has graciously
agreed to take some questions.

I would like to invite people who would
like to ask questions if they could come

to the microphone that's in the center aisle.

And I'd like to also ask people if they could
be brief so that we can allow more of you

to be able to ask a short question.

Thank you.

>> Senator Hagel: And I'll
be brief with my answers.

>> Student: Senator, thank you for coming.

My name is John Slumrut [phonetic].

I'm a senior here.

In 1997, you were obviously a co-sponsor of
the Byrd-Hagel Resolution in the senate --

which correct me if I'm wrong
-- but basically said

that the U.S. should not enter an international
agreement on climate change if other countries,

particularly, China and India,
don't have their own restrictions.

Do you still have the same
perspective on that issue?

>> Senator Hagel: The Byrd-Hagel Resolution
which was passed in August of 1997,

which you correctly note that I
was the cosponsor at with Bob Byrd

from West Virginia, said two things.

You mentioned one of them, and that
is that the senate is on record saying

that it would not ratify any environment
on treaty if it did two things.

One, if it did not include all nations
of the world, not in equal fashion,

but all nations of the world in addressing
this in their own way in some way.

Partly, that was a result of good logic.

China now is the largest emitter of greenhouse
gases in the world, surpassed the United States.

How in the world were we going to get to a
resolution if it was global and the environment

if we didn't ask all nations to participant.

Second part of that resolution was if
it did economic damage to the economy.

Do you know what the vote
was on that resolution?

>> Student: 95 to zero?

>> Senator Hagel: Yes.

And -- 95 to zero.

And I was in Kyoto at the time and we --

when they voted on it and Vice
President Gore came in and signed it.

But President Clinton never
submitted it to the senate.

And, unfortunately, what happened with
it -- the reason he didn't submit it --

because he knew that the senate, 95 to zero, was
on record saying that they'd vote against it.

But I always thought there was
a little dishonesty in that.

And what happened was -- because, if
you believe in something, you signed it,

why wouldn't you bring it forward
to the United States senate

where constitutionally we have
the responsibility to debate it.

At least debate it.

Let the American people hear
the both sides of this.

But we never -- we never saw that happen.

Unfortunately, what happened in the -- in
2000 when you had Bush and Gore running,

is Bush took a very strong
position in -- and I in Kyoto.

And, of course, Gore was
the one who signed Kyoto.

And, therefore, there was no middle ground or
consensus to, well, where do we go from here.

And, unfortunately, it has cost us time.

It has cost us credibility.

I was asked in the spring of 2001,
with the new Bush administration,

to come brief the president, the
vice president, and the cabinet on --

on what my thoughts were on
what should be the position

of the new Bush administration
on an environmental protocol.

And what I did -- now the
president wasn't there.

The Vice President was there, and
I think all the cabinet was there.

What I -- what I did say in about a 45-minute
briefing to the cabinet was I thought the --

the Bush administration should come forward
with an alternative environmental proposal

that they could table at the U.N.
general assembly in September of 2001.

Well, we know what got in the way
partly was September 11th 2001,

but I don't believe the Bush administration
ever had any -- any intention to go forward.

It certainly didn't happen in eight years.

Now there were pieces that they did but
never a larger context of a -- of a treaty.

And the reason I felt strongly about
that is because, first, I thought we --

the United States -- did have some
obligations and responsibility in this area

and that we couldn't just walk away and
say, "well, we don't like that one,"

and then never hear from us again.

That was hurting us terribly
with our allies around the world

and it was not in our interest to do nothing.

So that's a little bit of an
embroidered part of where we are.

I still believe today that the
Kyoto -- Kyoto protocol didn't work,

doesn't work, would've never worked.

And I hope we'll be able to come up
with something in Copenhagen in December

that is far more realistic because we
do need to do something about this.

>> Student: Thank you.

>> Senator Hagel: Thank you.

>> Student: Senator Hagel, thank
you very much for coming today.

You -- you're talking a lot about partisanship
in Washington and how we need people

who are more bipartisan who are willing to
perform compromises and work across the aisle.

With the recent death of Senator
Kennedy, we heard a lot --

we heard a lot of commentators talk
about, like, he was the last senator

to represent the older age of
the senate where we had a lot

of that bipartisan compromise
so my question to you is:

Why do you believe the United States
Congress and Washington, in general,

has become hyperpartisan and do
you think we can return to an age

of bipartisanship and compromise?

>> Senator Hagel: Well, let
me start with Senator Kennedy.

Kennedy -- Senator Kennedy
represents a tremendous loss

for the institution of the United States senate.

Regardless of whether you agree with
him or not, whether you like him

or not, that's -- that's irrelevant.

This is a man who believed in the institution,
who always tried to make the institution better,

and he strengthened the institution.

He read Alexander Hamilton's papers.

And you bright students I'm sure have all
read the federalist papers probably three

or four times.

The federalist papers are the
implementing documents of the constitution.

You all know that.

And, especially, two or three of them --

I think 89, 87, 88, something
like that -- are about the senate.

How should the senate work?

Why is there a senate?

And you all know the basics
on why we have a senate.

Kennedy was one of those who really strongly
believed in the value of that institution

within the walls of what goes on.

That no one person was bigger
than the institution.

No one president is bigger than America.

No one individual is bigger than anything.

You remember the great -- de Gaulle quote:
"Graveyards are full of indispensable men."

That's it.

And -- and he's a great loss -- Kennedy is to
the -- to this country, I think too, by the way.

I left the senate in January of this
year with some of those kind of people.

John Warner, World War II generation.

Pete Domenici.

Some of those who really understood the
institution and the responsibilities

of the institution and responsibilities
as us as custodians

and fleeting stewards of the institution.

I do think it's generational.

I do think it's generational.

We only have about three -- two -- two maybe
World War II veterans left in the senate.

Incidentally, both from Hawaii
-- well, no we got three.

And you can see the difference in -- in
attitude and thinking about how they frame

up issues and where we should go.

And I think we'll get back to that.

I think we're living through one of those
blips in history of a very narrow partisan band

of thinking that's brutal, that's nasty.

That's also, I think, much instigated by the
talk shows that I've heard and I've mentioned.

Everything is about confrontation.

The news -- the news channels,
the -- the so-called "news shows."

Most of them have turned into
just high-drama entertainment.

Very few real news programs.

Maybe the Laher Hour is probably
as much news as any of them.

All these things have crowded in on what I was
referring to institutions of self-governance.

I think we will come out of this, and I think
we'll come out of it because of your generation.

I really do.

Your generation has a wider
band of understanding.

That doesn't necessarily mean you're
smarter or your better, but you've --

you've been conditioned differently.

And your width is -- is much wider
than any generation by many times over.

My -- I've got a daughter who just
started college this -- this year.

Son is a junior in high school.

And I watch over the years
how they've developed.

I mean, computers, Internet, no big deal.

But they had been exposed because they've
exposed themselves to both good and bad,

but incredible things that they just start
with knowing that no generation ever has.

Now that doesn't mean you won't squander it.

You might -- you know, you might.

You could screw it all up.

I don't think you will.

I have great confidence in your generation
that you will -- you will ride it again.

But these are historical blips.

But, again, I go back to this
last point: We're living in a time

when there's little margin of error.

You can't recalibrate screwing up big
decisions like you used to be able to.

You could make -- you could make
bad decisions and make mistakes

and you'd have some time to self-correct.

The magic of America has
been as much as any one thing

in our constitution -- the
ability to self-correct.

Half of the people in this room
90 years ago could not vote.

Women could not vote in America 90 years ago.

We fixed that through a constitutional
amendment.

Unless you were a white, male landowner,

when this great republic was formed,
you didn't have all the rights.

Anybody think that the current occupant of
1600 Pennsylvania Avenue would be there today

without the Voting Rights
Act, Civil Rights Act of 1965?

I doubt it.

I doubt it.

We can self-correct without killing each other.

We can self-correct without going to
the streets and having a revolution.

That's the magic of America as much as anything.

That's what we need to seize on --
using that self-correction process.

I think your generation will get it, but it's
a loss to the institution when we lose people

like Kennedy and Warner and
those people but that's life.

No indispensable men or women.

>> Student: Thank you.

>> Student: Hello, Senator Hagel.

Thank you for coming.

Based on what you were speaking before
in regards to the hyperpolarization

with both the parties, also the doctrination,
the strict party lines that both sides

of the aisle were starting to go
down, if you were to run again --

and I realize it's a very big "If" --

would you identify yourself or run
more as a moderate democrat -- as a --

as a conservative democrat
or as a moderate republican?

>> Senator Hagel: I would run as Chuck Hagel.

[Laughter] I always have.

And I've been affiliated with the
republican party philosophically.

When I first cast a vote, as a young
21-year-old sergeant sitting on top of a tank

in the Mekong Delta in 1968, my
first vote, I voted for Dick Nixon

and for the republican running for
the senate and the republican running

for the house in my district in Nebraska.

And I did that.

I suppose my father had -- my father
had died when I was in high school.

He was a World War II veteran,
but he followed politics

and he was -- I'm the oldest of four boys.

My father died when he -- when I was 16.

But he influenced my thinking,
I think, and my grandfather did.

Republicans.

But I was just closer philosophically I thought
to what I knew what the republican party

or what I thought the republican party
stood for versus the democratic party.

I mean, that's what parties are.

They're -- they're -- they're
large philosophical statements

about the role of government.

No more, no less.

And I identified myself as
a republican in the senate.

I caucus with republicans.

Voted -- my voting record would be -- if you
-- if you go back and look at my 3500 votes,

you'd -- it would be clearly, I think, a --
a republican voting record so-called as far

as the philosophical lineup but
I crossed the aisle many times.

And I've got the scars to prove it.

And -- but I was never conflicted by that.

So, if I'd run again, I'd run on
my record, I'd run on who I am,

and -- and that's the way I'd do it.

>> Student: Thank you.

>> Senator Hagel: Thank you.

>> Student: Regarding what you said earlier
about your beliefs in people have to look inside

and are only accountable to themselves and if
environmental factors are just part of life,

do you think that's a uniquely American idea
or does it exist internationally as well?

>> Senator Hagel: What idea is that?

>> Student: The idea that you can
pull yourself up by the bootstraps.

>> Senator Hagel: Oh.

Well, I don't know.

I'm not a sociologist, an
anthropologist, or any other -ologist.

I'm not an expert on anything.

I'm a former senator.

[Laughter] I think there is some uniqueness
that can be attributed to our system,

to our country of you can make of yourself
anything you wanna make of yourself

within the boundaries of your god given talents.

I've hired many, many people in my life, as
many of you have, in many jobs, many capacities.

And the one attribute that I have
always found that's most important

when you're hiring someone is attitude.

And you give me a mediocre student or an
average thinker with the right attitude

and I'll take that -- that person.

Because, if you've got the right
attitude, you can do about anything.

I've seen incredible stories as you all have.

And I bet there are a lot of them right here
of the right attitude can transform you --

can transform things and not much the
right attitude can't prevail over.

And I think there is some Americanism in that.

I don't think we invented that.

I -- I mean, there are other stories around
the world of people I see every day when you go

to Africa, whether you go to
Asia of incredible stories

about individuals pulling themselves
up in very severe situations.

But I -- I think that we can
take some credit for that

and I'll tell you for -- for no other reason.

We have a system that allows that.

Now the fact is -- we all know this --
we're all not -- we're all not born equal.

You know, I'm sorry but we aren't.

Height, weight, color, brains, rich,
poor, Michigan, Nebraska, New York.

And I acknowledge that I got an unfair
advantage in life being -- being from Nebraska.

[Laughter] But we all don't have that.

So -- so you -- we each start at
our own starting gate our own way.

And I don't know of a person in my life -- and
I'm 63 -- that there has not been some tragedy,

something happened to that person
or his family or her family.

Everybody gets a share of this.

And I know it's easy to say,
well, "that person's lucky."

"That person's got it all."

"That person was born rich."

"He's never had to do anything."

Well, some people are.

But in the end -- I mean, look at Ted Kennedy.

I mean, you can take anybody and -- a tragedy
with your children -- with -- with whatever.

It's -- it's what -- it's what you do --

the opportunity you have to get
above that and prevail over that.

And America is, I think, unique
in that -- in that sense.

That we have a system that
allows you to do that.

Public education probably has been as
important as any one thing in the development

of this country in allowing poor
people, people of all kinds of races

and creeds some equality to get ahead in life.

A good public education system.

And -- and now other countries
have good public education too,

but our country has been consistently good.

I know there are other variations
of that -- big city schools.

A lot of them we've got problems.

In Washington, D.C., huge problems.

New York does.

I -- I know about them.

We've got problems.

But just the fact if you got the right attitude,
if you wanna do something with your life,

and you feel it strong enough, you can do it.

You really can do it.

>> Student: Senator Hagel, I'm Josh
Fengmeir [phonetic], a master student here

at the Ford School, and I was an
intern in your office in 2006.

>> Senator Hagel: What's your name?

>> Student: Josh Fengmeir.

>> Senator Hagel: Oh, yes, yes.

You look a lot better now.

[Laughter]

>> Student: Thanks.

>> Senator Hagel: I think education's
been helping you, yeah, so...

>> Student: It's this Michigan climate.

>> Senator Hagel: Thank you.

Yeah. All right.

Great to see you again.

Thank you.

>> Student: Yeah.

My question is regards to last year's
presidential campaign when you were one

of the few members of Congress who elected
to not endorse either then Senator Obama

or Senator McCain even though you
have a long-standing relationship --

friendship with Senator McCain

and you accompanied Senator Obama on his trip
to Afghanistan and Iraq prior to the election

so I was wondering if you could kind of
describe your calculations and your process

in your decision to not make an endorsement?

>> Senator Hagel: Sure.

Thank you very much.

And nice to see you, again, too.

Thanks for your good work.

I'll have to go back and
look at your record and...

[Laughter] And I wanna talk to
your teachers as well about this.

[Laughter] I didn't calculate anything.

And here's what I did.

I made a decision -- and John
McCain is a very close friend.

I was co-chairman of his
presidential campaign in 2000.

No one I respect more than John McCain.

But John and I -- our view of the world -- the
wars, foreign policy, the people that John had

around him, I just could not support that.

And John and I talked about it.

Our offices, as you remember,
were right next to each other.

Our offices on the floor of the
senate were right next to each other.

I -- I just couldn't -- honestly, I
suppose I could quote the Jerry Ford quote.

You've got to follow your own
convictions and your own conscience.

Doesn't mean I'm right, doesn't mean I'm wrong.

But that was my conviction.

That was what I believed -- that it
would've been wrong to do that for me.

I just -- I couldn't do it.

I couldn't agree with John
on a lot of the stuff.

And I thought the people
around John were dangerous,

and I didn't want to see them in power.

Now, I did not endorse Obama
because I told John --

and I told Obama this --
that I would not hurt him.

I wasn't -- I was not going
to go out and campaign

against him and I would not endorse Obama.

Obama asked me to go, as you
say, to the Middle East with him.

I did. He asked me over the last year -- and I
got to know Obama very well the last four years.

We were in the foreign relations
committee together for advice.

I gave it to him.

I gave John advice.

If he asked for it, I'd give it to him.

What I did then in that political climate,

that political year last year is I just turned
all my attention to what I thought was right

for my country and what I could
do to help make a better world.

And that's the way I handled it.

I was honest with both of them, up front with
both of them, told them both what the deal was.

And I talked to president -- the vice
president often and general Jones.

I talked to the Vice President Sunday night
and so I have opportunities to weigh in.

They do ask my advice.

I suspect I have no influence, nothing
is new, but at least they humor me.

[Laughter] And call me and ask me
but that's why I did what I did.

Thank you.

>> Student: Senator, thank
you for being here today.

A couple of years ago you sponsored a bill
for comprehensive immigration reform bill

that got tabled and ended up in a stalemate.

If you were to attempt such a bill

with the current circumstances,
what would you do differently?

>> Senator Hagel: I'm sorry.

I didn't hear.

Are you talking about an
immigration reform bill?

>> Student: Yes.

>> Senator Hagel: And the
question was if I was what?

If I --

>> Student: So if you were to do this again

under the current circumstances,
how would you do it differently?

>> Senator Hagel: Well, my immigration reform
bill was I introduced the first comprehensive

immigration reform bill with Tom Daschle

when Daschle was the majority
leader and then minority leader.

And we never could get any traction.

And then finally after -- unfortunately, after
Daschle's defeated, I joined with Ted Kennedy

and Barack Obama and democrats and McCain and
Mel Martinez and a strong bipartisan group

of senators and we actually passed the
Hagel-Martinez immigration reform bill with,

I think, 64 votes.

You all know we have a hundred senators.

64 votes represents a rather
significant bipartisan vote.

What happened, though -- and
I thought it was a good bill.

What year were you an intern in my office?

>> Student: 2006.

>> Senator Hagel: Okay.

This was right around that time.

You remember this.

The House of Representatives
passed a bill that they --

they said was immigration reform but it wasn't.

It -- it was border security
is really what it was.

Well, border security is not immigration reform.

I mean, you need border security, of course.

Any sovereign nation needs to secure their
border, and I didn't object to any of that.

No one else did.

But to try to pass that off as
immigration reform was complete folly.

It was dishonest.

First time this has ever happened that
I'm aware of at least in modern times.

So you had two different bills.

Big important issue.

The speaker of the house -- then Dennis Hastert
-- refused to call a conference of the two bills

and that's the way -- as you all
know you reconcile the differences

between house and senate bills.

The speaker refused to call a conference.

So the congress just plays out,
immigration reform is dead.

And I really always thought that that
was such an irresponsible thing to do.

And, incidentally, as you know,
President Bush was very much

out in front on this immigration reform bill.

And, in fact, he was -- he was on the other
side of the republican party on this -- on this.

And I was one of the first
supporters of what he wanted to do

and first sponsor of the comprehensive bill.

I brought him to Omaha, I remember, on this.

But the Republican party was
against their own president on this

but that's -- that's what happened.

If I was there today, I'd come back again
and try to do -- put something back together.

I would -- I would expect that with the
democrats controlling the house and the senate

and -- and Obama knowing where he is -- because
he was a co-sponsor of my bill -- that --

that next year they may try to move
something on immigration reform.

Obviously, this year there's not much time
left this year and they've got a couple

of other fairly significant issues that
they're -- that they're dealing with.

Thank you.

>> Student: Thank you.

>> Student: Thank you very much, Senator.

You've talked a lot about
establishing common ground.

And I was wondering how do you go about that
in what so often seems a polarized society?

For instance, we have so many governments
that seem uninterested in doing so.

>> Senator Hagel: Well, I think it's
like anything when you're trying

to develop a relationship with someone or
institutions or whatever the situation.

When you talk about common ground, common
interests, you find what is important

to that other person and you try to blend that
priority or priorities of the other person

with your priorities and
with this guy's priorities

and this lady's priorities and so on and so on.

And -- and you can find those
kind of -- kind of things.

Health care.

My goodness.

Next to water and food and oxygen, I
don't know what is more common ground

than health care for everybody.

Richer -- richer or poorer.

Everybody gets something.

I mean, none of us are going
live forever I don't think.

There's always something.

And I don't know really other than those three
things I mentioned what's more common ground

than health care.

And it ought to be at least simple enough to
move forward on trying to figure this thing

out on identifying that common ground.

So you find those bands of interests and
commonality that you can blend together

that Jerry Ford did so skillfully in his years
in the house and you try to make that work.

It will be imperfect.

There is some sanding down and it's
never exactly the way you want it.

I never saw a bill ever come out of
a committee I was on or in the --

in the senate that I voted for or voted against.

That -- that was in my mind 100% ideal.

That I could not improve on that bill.

I -- I just never saw one.

Now, that doesn't mean that I'm right.

That doesn't mean I would've improved it.

Maybe I would've made it worse.

But, in my own mind, I -- if I had a chance
to rewrite that bill, I would've rewritten

at least parts -- every one of them.

So you've got to find that but the --

I go back to the answer of the
question over here about attitude.

If your attitude is wrong, if your reference
point is wrong, if your intention is

to use health care to destroy the other party
or destroy the presidency or Barack Obama,

it is very unlikely you're going to
find much consensus from people who want

to use health care as some republican
senators have said publicly.

If we kill Obama on this and we destroy this
and we defeat him, that will drive a stake

through his political heart
on this administration.

I just find that about as irresponsible
a thing that I can think of.

And I'd say democrat, republican,
it doesn't make any difference.

I mean, what are you there for?

Okay.

>> Susan: Unfortunately, we're going
to have to make this our last question.

>> Senator Hagel: All right.

>> Student: In the search for someone
to blame for the economic crisis,

a lot of people have put the blame on the
CEOs with the golden parachutes pushing

for deregulation and I --
as a businessman, what --

to what extent do you think this
is true and they do bear the blame?

>> Senator Hagel: Well, I think
there's no question that the leaders

of our financial service industry have to
take a tremendous amount of responsibility

for what happened, and I don't
think it's even debatable;

so do regulators in Washington; so do all of us.

You know, I sat on the banking committee for
12 years, and I watched this nonsense unfold.

Now it doesn't mean I have a better
view or I'm smarter than anybody else.

But, for example, I watched the ratings
agencies rate the IPOs and rate the stocks

for investors -- Moody's, S&P, so
on -- come before our committee.

And I would ask -- I'd ask
this question more than once.

How can we or an investor have any
confidence in your rating of a stock or a bond

when you're getting millions
of dollars in consulting fees,

in advisory fees from that same
company that you're rating?

I don't think that's complicated to
understand that, but maybe it is.

I don't think so.

That is as pure a conflict of
interest as I can envision.

But the culture we allow
to develop -- we all do.

The media played with it.

The media was lazy.

The regulators were lazy.

I mean, the Bernie Madoff thing now we know
that how many times the FCC investigators looked

at Madoff's stuff and said, "wow, you
know, it may be a little unorthodox.

It's fine."

My god, how can he continue to do this.

There were so many people that were going
to the enforcement division of the FCC

and said this guy is up to something.

This is a clear, fraudulent pyramid scheme.

That you got to do something.

"Well, I don't know."

"But he's a buddy of one of the --
one of the guys up on top" and so on.

You know, we all have to
take responsibility here.

And the financial service people certainly
do, and I probably give them the edge

on who I would put most responsibility on.

It would be them.

And what is astounding to me -- and I know many
of them and I'm on some advisory boards at some

of these different companies
-- but none of the bad ones --

but is how they're so disconnected
-- so many of them --

from America when they can't
understand why Americans are so upset.

Well, why are Americans so upset?

I -- you know, I said, well, wait a minute.

For most Americans, this
is not a complicated issue.

Most Americans play by the rules.

They pay their taxes.

They work hard.

They try to raise their families.

They try to live a decent life, and
they have a couple of things that --

that they like whether it's church, synagogue,
music, baseball, bowling, whatever it is.

And they see you guys in New
York doing these obscene things.

The wealth is just obscene.

There's no other way to say it.

And then you crash the system.

And then these same decent people
all over America have to bail you

out with their tax dollars and you
don't understand why people are upset?

Now there's two issues here.

One is institutions.

And I was there up until January and was

in most all those meetings
with Bernanke and all of them.

And I don't think Bernanke and Bush and
Paulson and Geithner and Obama had any choice.

You had to save the institutions.

Because, if those financial
service institutions went down,

that would collapse the entire
financial system in the world.

I mean, you talk about chaos and instability.

The other piece -- so one was the institutions.

The other piece were the individuals.

Now a lot of these individuals are
being picked off and they're leaving

and gone and some are being indicted.

Some will go to jail before this is all over.

And the law will catch -- justice
will catch up with many of them.

Just like when the Enron
explosion occurred and WorldCom.

You know, a lot of those guys are still in jail.

And on some of the baby bells that these guys
were buying these things on loading up leverage

and debt and then just ripping everything
apart and then selling off pieces.

Just destroying the companies,
destroying people's lives.

And so, you know, we're going through
a very difficult part of this,

but I think what will come out
of this and it will be difficult.

We will come out of it.

It's painful.

It's unfair to a lot of people.

But what will come out of
it will be a better system,

a more responsible accountable
system, and we'll be stronger for it.

There will be a lot of people hurt that
shouldn't be hurt and it'll be unfair.

But, in the end, we'll come
out of it and it'll be better.

And I talk about our young
people here -- the students.

This will condition them.

This will frame their reference
-- their point of reference

in everything they do until they die.

This experience.

Watching is experience.

Watching what their parents
went through and all the rest.

They will never forget that.

This is one of the reasons we talk
about the greatest generation.

I mean, that World War II
generation they were defined

by they're anchored by the Great Depression.

My mother and my father went through it.

My mother's -- my mother was one of seven girls.

Her dad had an old scrubby
farm out in western Nebraska.

He lost it in the depression.

I mean, that's not an unusual story.

A lot of people had the same thing
happen to them as my mother did.

For my father, the same story.

But that conditioned them.

And this group of young people will
be conditioned by the same thing.

But thank you very much.

Thank you.

[ Applause ]

>> Susan: Thank you very much,
Senator Hagel for your candor

and sharing your insightful
perspectives with us.

We appreciate it greatly.

I'd like to invite all of you to
stay and join us for a reception

that will be held right here in this room.

We actually have food and
beverages on either side.

And I know there are some who
did not get to ask questions,

but we do now have a more informal
time to have some interaction.

So, again, thank you very much for
joining us for our 2009 Citigroup lecture.

And thank you, Senator Hagel.

[ Applause ]