Hello, Midshipmen! (Applause.) Well, thank you, Governor O'Malley, for your kind introduction and the great support that Maryland gives this Academy. To Secretary Mabus, Admiral Greenert, General Paxton -- thank you all for your incredible leadership of our extraordinary Navy and Marine Corps teams.

To Vice Admiral Miller, thank you for the outstanding work that you do. To Captain Clark and all the faculty and staff; to the moms and dads who raised your sons and daughters to seek this life of service; to the local sponsor families who cared for them far from home; the members of the Class of 1963 -- veterans who've guided these midshipmen along the way -- today is also a tribute to your support and your patriotism. And I know that the Class of 2013 joins me in saluting your service as well. (Applause.)

To the entire Brigade of Midshipmen -- you embody the highest virtues of this venerable institution. And yet, I know that some of you at times have enjoyed yourselves at other local institutions like McGarvey's and Armadillo's. (Applause.) But today is a day of celebration -- and also forgiveness. And so, in keeping with tradition, I declare all midshipmen on restriction for minor conduct offenses are hereby absolved. (Laughter and applause.) As always, Admiral Miller gets to decide what's "minor." (Laughter.) Some of these guys are laughing a little nervously about that. (Laughter.)

Now, obviously, most of all, it is wonderful to be able to celebrate this incredible Class of 2013. This has special meaning for me as well, because the United States Naval Academy was the very first service academy that I had the privilege to address as President. On that spring day four years ago, most of you were still in high school, finishing your senior year, or at NAPS, finishing up prep school. You were a little younger -- and I was, too. You had your entire Naval Academy experience ahead of you; I was already getting chest bumps from the graduates of 2009. (Laughter.)

Soon after, you came to the Yard -- and you got quite a welcome. The joy of I-Day. Wonderful haircuts. Stylish eyeglasses. And all that Plebe Year, if you got something wrong, your upperclassmen kindly corrected you -- at high volume, at very close range. (Laughter.) When Michelle brought our daughter Sasha here for a visit, she got a somewhat different reception. She was just in elementary school, but it seemed like the Navy was already doing some recruiting -- because as she went through Bancroft Hall she came to one room and saw the name on the door -- "Sasha Obama, Class of 2023." (Laughter.) So you never know.

Today, each of you can take enormous pride, for you've met the mission of this Academy. You've proven yourselves morally, living a concept of honor and integrity -- and this includes treating one another with respect and recognizing the strength of every member of your team. You're the most diverse class to graduate in Naval Academy history. And among the many proud young women graduating today, 13 will serve on submarines. (Applause.)

You've proven yourselves mentally. Now, I know that some think of this as just a small engineering school on the Severn. You've not only met its rigorous standards, you've helped this Academy earn a new distinction -- the number-one public liberal arts school in America. (Applause.)

And you've proven yourselves physically -- a Herndon Climb of two minutes, five seconds. (Applause.) Now that they put the grease back on, no one will ever match your time. (Laughter.) More importantly, last month I welcomed Coach Ken and the team back to the White House because you beat Air Force, you beat Army, and you brought the Commander-in-Chief's trophy back to Annapolis. (Applause.)

So, Class of 2013, in your four years by the Bay, you've met every test before you. And today is the day that you've been counting down to for so long. You will take your oath. Those boards and gold bars will be placed on your shoulders. And as your Commander-in-Chief, I congratulate each of you on becoming our newest officers -- ensigns in the United States Navy, second lieutenants in the United States Marine Corps.

And soon you will join the fleet. You'll lead Marines. And just as you've changed over the past four years, so, too, have the challenges facing our military. Before you arrived here, our nation was engaged in two wars, al Qaeda's leadership was entrenched in their safe havens, many of our alliances were strained, and our nation's standing in the world had suffered. And over the past four years, we've strengthened our alliances and restored America's image in the world.

The war in Iraq is over and we welcomed our troops home. Thanks to our brave personnel -- including our incredible Navy SEALs -- we delivered justice to Osama bin Laden. (Applause.) In Afghanistan, the transition is underway, our troops are coming home, and by the end of next year our war in Afghanistan will come to an end. (Applause.)

And today, we salute all the Americans who made the ultimate sacrifice in these wars, including 18 graduates of this Academy. We honor them all, now and forever.

Yesterday, I spoke about the way forward in the fight to keep our country secure -- for even as we've decimated the al Qaeda leadership, we still face threats from al Qaeda affiliates and from individuals caught up in its ideology. Even as we move beyond deploying large ground armies abroad, we still need to conduct precise, targeted strikes against terrorists before they kill our citizens. And even as we stay vigilant in the face of terrorism and stay true to our Constitution and our values, we need to stay ready for the full range of threats -- from nations seeking weapons of mass destruction to cyber criminals seeking to unleash weapons of mass destruction.

In these tough fiscal times, we also have to make hard choices at home, including in our Armed Forces. But I want you all to know as you enter in what I know will be extraordinary years of service, let me say as clearly as I can -- the United States of America will always maintain our military superiority. And as your Commander-in-Chief, I'm going to keep fighting to give you the equipment and support required to meet the missions we ask of you, and also to make sure that you are getting the pay and the benefits and the support that you deserve. (Applause.)

I'll keep fighting for the capabilities and technologies you need to prevail, and a shipbuilding plan that puts us on track to achieve a 300-ship fleet, with capabilities that exceed the power of the next dozen navies combined. (Applause.)

And I'll keep fighting to end those foolish across-the-board budget cuts known as the sequester, which is threatening our readiness. With deficits falling at the fastest rate in decades, it's time for Congress to budget in a smarter way that protects middle-class priorities, preserves investments in our future, and keeps our military strong -- because we have the best-trained, best-led, best-equipped military in history, and I am determined to keep it that way, and Congress should be, too. (Applause.)

We need you to project power across the oceans, from the Pacific to the Persian Gulf -- 100 percent on watch. We need you to partner with other navies and militaries, from Africa to the Americas. We need you to respond with compassion in times of disaster, as when you helped respond to Hurricane Sandy. And in all your work -- in your lifetime of service -- we need you to uphold the highest standards of integrity and character.

With the time I have left -- and I know it's a little wet, but the Superintendent told me that Marines and folks in the Navy don't mind a little water. (Laughter.)

With the time I have left, that's what I want to discuss today. It's no secret that in recent decades many Americans have lost confidence in many of the institutions that help shape our society and our democracy. But I suggest to you today that institutions do not fail in a vacuum. Institutions are made up of people, individuals. And we've seen how the actions of a few can undermine the integrity of those institutions.

Every day, men and women of talent and skill work in the financial institutions that fund new businesses, and put new families -- put families in new homes and help students go to college. But we've also seen how the misdeeds of some -- wild risk-taking or putting profits before people -- sparked a financial crisis and deepened the recession that cost millions of Americans their jobs.