Utah's industrial banking industry has a new and formidable enemy -- President Barack Obama.

As part of the president's plan for regulatory reform of the nation's financial services industry, which was unveiled earlier this week in an 85-page white paper, Obama is calling for the elimination of industrial bank charters and wants them all shut down within five years.

If successful, the president's plan could deal a hammer blow to Utah's economy, which is the home of 25 industrial banks that employ thousands of the state's residents and hold assets valued in excess of $168 billion.

Utah's industrial banking community is upset.

"Industrial banks are the safest and soundest financial institutions in the country," Louise Kelly, chief executive of EnerBank, said in a statement issued by the Utah Association of Financial Services. "We did not contribute to the current financial collapse."

Industrial banks, also known as industrial loan corporations or ILCs, are state-chartered but federally insured financial institutions that historically have operated in narrow niches, such as issuing credit cards or offering automobile loans. Utah is home to about half of the nation's ILCs but they account for approximately 80 percent of the industry's assets.

On Thursday, U.S. Treasury Secretary Timothy Geithner appeared before the Senate Banking Committee and argued that institutions that take deposits and make loans need to come within a common framework of standards and oversight.

"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.

Geithner's statements were viewed with skepticism by Utah Sen. Bob Bennett who said that not a single industrial bank contributed to the nation's financial crisis. "And interestingly, when Lehman Brothers went down, one of the bright spots of that bankruptcy was that they had an ILC that was financially sound."

Bennett said the president's proposal was overkill.

"So we're going to take an area that works, and we're going to abolish it in the name of trying to make the system that hasn't worked a little bit stronger," Bennett said. "I have a very serious problem with that."

Bennett pointed out that the Federal Reserve has been pushing for regulation of the ILC's "for as long as they've been around. The Fed seems offended somehow that the regulation of ILCs is left to people like Utah and the FDIC. So as a matter of principle, the Fed wants to control them."

Although Ed Leary, commissioner of the Utah Department of Financial Institutions, pointed out the administration's plan is only preliminary and there is not yet any legislation before Congress. Nevertheless, he said, the proposal was disheartening.

"It is discouraging they would want to eliminate a charter [for industrial banks] that has never caused problems and didn't contribute to any of the country's financial problems," Leary said.