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US Treasury Taps Former Chrysler Exec in Bid to Save Ally Financial

Gerry Greenwald to serve as new director of troubled lender.

by on Aug.16, 2012

Former Chrysler Vice Chairman Gerry Greenwald.

He played a critical role in saving Chrysler three decades ago, and now the U.S. Treasury is hoping one of the maker’s top former executives can work the same magic at struggling Ally Financial, one of the companies bailed out by the government in 2009.

A turnaround is more than academic for taxpayers.  The Treasury still owns a 70% stake in Ally, formerly known as General Motors Acceptance Corp.  The firm continues trying to dig out from the financial crisis of 2008 and a disastrous foray into the mortgage business.

Ally said Gerald Greenwald, former chairman and chief executive officer of United Airlines and vice chairman of Chrysler Corp., will join its board along with Henry S. Miller, an experienced private equity executive.  Both were nominated by the Treasury Department.

News You Can Use!

“Gerald and Henry are valued additions to the Ally board,” said Ally Chairman Franklin Hobbs. “They bring extensive experience from both the financial and auto sectors and will add key perspectives as Ally continues its transformation. We are pleased to have these two seasoned leaders join the board.”


Ally Tosses Troubled Mortgage Arm Into Bankruptcy

Renewing focus on autos – and paying back a bailout.

by on May.15, 2012

Ally, the former GMAC, shifts focus back to auto loans.

Ally Financial Inc. the nation’s largest automotive lender, has placed its money-losing mortgage subsidiary into bankruptcy – a move that actually could free it up to stage a much-anticipated IPO.

The bankruptcy filing was part of series of strategic actions aimed at strengthening the company’s longer-term financial profile and accelerating repayment of the U.S. Treasury’s loans that bailed out Ally when it was still operating as the General Motors Acceptance Corp.

Such a Deal!

The subsidiary, known as Residential Capital, or ResCap, has been saddled with billions of dollars of so-called “toxic” loans generated during the bubble economy that came crashing down in 2008 and 2009, sinking a number of home lenders.


GM Back in Auto Financing with AmeriCredit Buy

Cash transaction creates a new captive finance company at General Motors to provide more vehicle loans and leasing.

by on Jul.22, 2010

Is Whitacre creating his own empire, just as he did at SBC, in effect reassembling AT&T ?

General Motors Company and AmeriCredit Corp. (NYSE: ACF) today announced they have entered into an agreement for GM to acquire AmeriCredit, an independent – and more importantly successful – auto finance company in an all-cash transaction valued at about $3.5 billion.

The acquisition creates a new GM captive financing arm that will enable GM to provide potential customers with more credit options. GM claimed it would not change its current incentive plans in the U.S., which are among the industry’s highest. If true, this means that taxpayers would not incur increased costs from more of the kinds of subsidized financing that auto companies often use to bolster sales.

Thus far this year GM sales are not increasing as fast as the overall market. Auto companies continue to incur loses because of overly optimistic residual values for returning lease vehicles.

GM said it needs to provide financing to “non-prime” customers – 40% of the U.S. population but only 4% of its current car buyers – who are remain pariahs in the credit markets despite lavish taxpayer financed bailouts of Wall Street firms and big banks that totaled almost a trillion borrowed dollars  – and were designed to free up credit, according to the Obama Administration.

Under the terms of the agreement approved by both companies’ boards of directors, AmeriCredit shareholders will receive $24.50 in cash for each share of stock held as of the closing date, which is due by the end of the fourth quarter of 2010, pending various conditions, including the approval of AmeriCredit shareholders

GM’s proposed purchase price is about a 25% premium over AmeriCredit’s closing share price on Wednesday. AmeriCredit has traded for as high as $26.49 a share this year.

“Adding AmeriCredit to our team will improve our competitiveness in auto financing offerings, and I am very pleased to have them on board,” said GM Chairman and Chief Executive Officer, Ed Whitacre about the Texas based financing company.

Following Your Money!

GM claimed it will maintain its relationship with Ally Financial, the renamed GMAC, which is and now an independent taxpayer-owned company that provides retail and wholesale financing to GM and Chrysler Group. Currently GM has 57% of its transactions in the retail prime market through Ally and other banks, above the industry average of 53%.


Taxpayer Owned GMAC Rebrands as Ally

The $100 billion GMAC auto finance operation moves on.

by on Jul.14, 2010

Your dollars are in his hands. If he cleans up the GMAC mess, taxpayers will be paid back.

Ally Financial Inc. (Ally) will rebrand its GMAC consumer and dealer-related auto finance operations in the U.S., Canada and Mexico and begin using the Ally name next month.

The latest move follows the transition of the GMAC corporate entity to Ally Financial during May 2010.

Both are attempts to leave behind GMAC’s tattered image and distance the company from the wildly unpopular taxpayer financed bailouts of last year.

The Ally brand will be used for auto financing activities in the three North American markets, including activities to support the following manufacturers: General Motors, Chrysler, Saab, Thor Industries and FIAT Mexico.

Following the Money!

The U.S. Department of the Treasury last December provided an additional $3.8 billion in capital from taxpayers to GMAC to keep it solvent, in addition to almost $14 billion previously forwarded. (See Taxpayer Owned GMAC Reports Record Q4 Loss and U.S. Takes Controlling Interest of GMAC ) Results for the 2009 fourth quarter and full year were largely affected by losses related to GMAC’s reckless lending practices in its mortgage operations.

The Obama Administration has thus far been unable to implement any reforms whatsoever in financial regulation after the collapse of the Lehman brothers or AIG, among others, in the fall of 2008.


GMAC moves on

GMAC Financial Services is staking a claim to its independence.

by on May.15, 2009

"Given the recent financial market turmoil, people are looking for a safe, honest and efficient place to save."

"Given the recent financial market turmoil, people are looking for a safe, honest and efficient place to save."

General Motors CEO Fritz Henderson said this week that GM no longer has any representation on the board of GMAC. GM sold a majority interest in GMAC to Cerberus Capital Management back in 2006. Last December, GMAC was reorganized in an exchange for $5 billion in federal funds. When it accepted money from the Trouble Asset Relief Program (TARP), GMAC was required to loosen its ties to Cerberus and GM, which is why Henderson said he doesn’t always have up to the minute information about what’s going on at the big finance company.

GMAC, which is now being overrun by refugees from Wall Street meltdown, has now announced that it is changing the name of the consumer bank that is one of the keys to its future plans. 

“The world doesn’t need another bank, it needs a better bank.” This philosophy is at the heart of the launch of Ally, a new brand for a U.S. online bank designed to disrupt the status quo and challenge win-lose practices in the banking industry, GMAC said. Ally Bank offers a variety of savings products, including no-penalty certificates of deposit (CDs), online savings accounts and money market accounts.

“We are launching a new brand with a new approach of treating customers with total transparency,” said GMAC Chief Executive Officer Al de Molina. “Unlike other banks which depend on fees as a business model, we want to make money with customers, not off customers.”    (more…)