Report: U.S. suggests Ally Financial breakup

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Report: U.S. suggests Ally Financial breakup

Report: U.S. suggests Ally Financial breakup

Crain’s-

The U.S. Treasury Department, which put $17.2 billion into a bailout of Ally Financial Inc., has indicated it would prefer a breakup and sale of the lender — including selling the company’s captive finance auto business back to General Motors Co., its original owner.

People familiar with the matter told Bloomberg that Treasury wants to make such moves because it no longer believes an initial public offering of Ally stock would succeed.

GM previously owned Ally when it was known as GMAC Financial Services. GM spokesman Jim Cain declined to comment on the report.

Treasury officials are telling Ally executives, directors and financial advisers that an IPO is unlikely soon because of the company’s high cost of capital relative to other banks, the potential bankruptcy of a mortgage unit, and its recent performance in Federal Reserve Board stress tests, said the people, who asked not to be identified because the talks are private.

[CRAIN’S DETROIT]

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