Detroit Free Press


The US Treasury sold its remaining shares of Ally Financial last night and this morning, cutting the last financial cordon in the auto industry bailout following the 2008 financial crisis.

The Treasury, which provided $ 17.2 billion in emergency aid to Ally, once owned 74% of the Detroit-based financial giant, which now focuses on auto financing for dealers and consumers, as well as on commercial and online banking services. Between yesterday and this morning, the government sold its 54.9 million Ally shares.

“Our rescue of the auto industry is officially over,” President Barack Obama said at a White House press conference on Friday. “We have now reimbursed US taxpayers every penny and more of what my administration pledged and the auto industry is on track for its strongest year since 2005.”

Treasury Secretary Jack Lew said the government clawed back $ 19.6 billion from its aid to Ally. This makes it the first profitable part of the Obama administration’s auto industry bailout.

General Motors received $ 49.5 billion from the Treasury’s distressed asset relief program. When the government sold its last GM shares about a year ago, the takeover totaled just over $ 39 billion. Of the $ 11.98 billion provided to Chrysler (now FCA US), the Treasury recovered $ 10.67 billion, Bowler said.

For the entire TARP effort, the government disbursed about $ 426.4 billion and recovered $ 441.7 billion, according to Tim Bowler, deputy assistant secretary for financial stability.

There are about 35 community banks that have received funds from TARP but have yet to fully repay their emergency funding, Bowler said.

The Treasury was able to sell the shares on one of the best days in the stock market this year. Bowler said the final shares were sold for $ 23.25. Ally shares traded at $ 23.72 shortly after the opening bell this morning.

Since then, Ally has sold assets and put its subprime mortgage subsidiary, Residential Capital, into bankruptcy before closing an initial public offering in April. CEO Michael Carpenter said earlier this year that the company could divest its last portion of government-held shares by the end of 2014.

The government’s exit will free Ally from restrictions on executive compensation and give Ally more flexibility to make loans and finance leases.

Prior to 2008, Ally was GMAC, the financial arm of General Motors. In December 2008, it was certified as a bank holding company, a step that made it eligible for the government bailout.

The worst of his problems were related to mortgages given to borrowers with poor credit quality. Investment banks and other institutions then bundled these loans into derivatives, which collapsed in value after the financial crisis.

Ally started reporting losses in 2007. In 2009, she lost $ 10.3 billion.

The Ally bailout was a crucial part of the Obama administration’s contingency plan to secure General Motors and Chrysler, because without Ally, GM and Chrysler may not have been able to maintain an adequate flow of loans. to their dealers and consumers.

Ally also revealed on Thursday that the U.S. Department of Justice had subpoenaed some of her subprime auto loan cases. Subprime loans are generally loans to borrowers with a troubled credit history. The Justice Department and the SEC have made similar requests to other lenders. GM Financial admitted in August that it had received a subpoena for subprime auto loans.

GM Financial had said the Justice Department was considering a civil lawsuit for potential violations of the Financial Institutions Reform, Recovery and Enforcement Act, a federal law that was passed in the wake of the savings and loan crisis. In the 1980’s.

Contact Greg Gardner: 313-222-8762 or [email protected] Follow him on Twitter @ GregGardner12


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