Obama regulatory plan hits industrial loan cos

NEW YORK, June 19 (Reuters) - The Obama administration's proposed financial regulatory revamp includes a provision that would mean greater oversight of industrial loan companies, and could lead to some of them being shut down by the non-financial companies that operate them, The Wall Street Journal reported on Friday.

The overhaul announced Wednesday includes a provision that would require ILCs to register as bank holding companies with the U.S. Federal Reserve.

That would subject companies that operate ILCs to greater government oversight, and put them in the same category as most large U.S. banks.

Most companies with ILC charters would likely close them if the change occurs, the Journal said, citing industry experts. There are 45 ILCs, many of them based in Utah or California, with total assets of $232.3 billion, the newspaper said.

Many ILCs are owned by companies not normally associated with the finance sector, including motorcycle maker Harley-Davidson Inc (HOG.N), discount retailer Target Corp (TGT.N) and health insurer UnitedHealth Group Inc (UNH.N).

According to a "white paper" outlining the regulatory overhaul, the Treasury Department said allowing companies to open ILCs or have non-bank charters gives them "access to the federal safety net," but without the accompanying oversight.

Companies conducting "basic" banking activities "need to come within a common framework of standards and restraints and oversight," Treasury Secretary Timothy Geithner told the Senate Banking Committee on Thursday.

"If we do not do that, then all the risk in the system will migrate to those parts of the system where you can do similar activities but not be subject to the same basic standards," he said. "We want to eliminate those gaps and loopholes that allow institutions to evade those basic standards." (Reporting by Jonathan Stempel; editing by John Wallace)