Obama Criticizes Banks Over Student Loan Subsidies

TROY, N.Y. — President Obama sharply criticized the nation’s largest banks for trying to stop legislation that would overhaul federal student loan programs.

Mr. Obama, speaking at a community college, said that American banks had received bailout money from the federal government, and yet were still fighting against a proposal that would eliminate an unwarranted subsidy which the banks receive for providing student loans.

“Ending this unwarranted subsidy for big banks is a no-brainer for folks everywhere,” Mr. Obama said, before lashing out against his favorite target of late. “Everywhere except Washington, that is. In fact, we’re already seeing the special interests rallying to save this giveaway.”

Mr. Obama’s trip to Troy, in advance of his appearance this week in Manhattan for the United Nations General Assembly, was fraught with political tension that had nothing to do with the education reforms that were originally supposed to be the reason behind the trip. Instead, political watchers in New York and the media were fixated on the interaction between Mr. Obama and New York Gov. David Paterson, who the White House famously urged recently to abandon his plans to pursue election in 2010 lest he be a drag on the Democratic ticket.

Earlier, Robert Gibbs, the White House press secretary, told reporters on Air Force One, “Look I think everybody understands the tough job that every elected official has right now in addressing many of the problems that we have. I think people are aware of the tough situation that the governor of New York is in. I wouldn’t add a lot to what you’ve read, except this is a decision that he’s going to make. The president understands the tough job that everyone has and the pressure that they are under.”

Mr. Paterson met Mr. Obama’s plane at the airport Monday morning, and the two men exchanged brief words and an even briefer hug before traveling — separately — to Hudson Valley Community College for Mr. Obama’s speech.

Interestingly, Mr. Paterson’s likely Democratic rival for the governor’s job, state Attorney General Andrew Cuomo, was also on hand for Mr. Obama’s education speech. The two rivals sat in the first row, separated by two state politicians, as they listened to Mr. Obama’s speech.

Mr. Obama gave both of them a quick shout-out at the beginning, before returning to his prepared remarks.

He said that the country is emerging from its economic crisis, adding that “our great challenge will be to ensure that we do not just drift into the future.”