--Two positions are among six spots Treasury has the right to appoint to Ally's board
--Company is trying to sever itself from government ownership
--Government owns a 74% stake in the company
(Updated with new details throughout.)
By Tom Barkley and Andrew R. Johnson
WASHINGTON--The U.S. Treasury announced two appointees to Ally Financial Inc.'s board of directors, exercising its right as part of its bailout of the largest U.S. auto lender during the financial crisis.
The two new board members have experience with restructurings, as well as the transportation sector, the Treasury said. They were approved at an Ally shareholder meeting along with the re-election of current board members.
The move comes as Ally has taken several recent steps to sever itself from the mortgage business and focus its attention solely on its U.S auto-lending operations in an effort to get out from government ownership.
Gerald Greenwald, founder of a private equity firm Greenbriar Equity Group, focused on transportation, was previously chief executive for United Airlines and held senior positions at Ford Motor Co. (F) and Chrysler.
Henry Miller, who has served as chairman of Marblegate Asset Management LLC since it was formed in 2009, has played a leadership role in restructurings for a number of firms.
Timothy Massad, assistant Treasury secretary for financial stability, said in a statement the two men will contribute to Ally's "efforts to repay taxpayers and support the auto industry recovery."
The two positions are among the six spots Treasury has the right to appoint to Ally's board as part of the government's bailout of the company. The other four positions are filled.
In May, Ally's money-losing mortgage subsidiary Residential Capital filed for Chapter 11 bankruptcy as part of a plan that would enable its parent to distance itself from costly litigation over soured mortgage investments, which have stalled Ally's efforts to repay a government bailout that topped $17 billion. The Treasury Department said at the time that it would support ResCap's move, Dow Jones Newswires reported in May.
The Detroit-based lender is also seeking bidders for its international businesses, which Ally hopes to sell by the end of the year. That step could further reduce the government's remaining $12 billion investment in Ally by a third, executives have said.
As of late July, Ally had received bids for the operations, which include auto-lending and banking businesses, from more than 30 parties, Michael Carpenter, chief executive officer of Ally, said in an earnings conference call earlier this month. One of those bidders is General Motors Co. (GM), Ally's former parent, which this week confirmed that it had submitted an offer for the businesses.
"Our intention is to find a way to get as much of those proceeds as the Federal Reserve will allow back to U.S. Treasury in the most efficient fashion," Mr. Carpenter said.
Ally has tried for more than two years to accelerate the government's exit from the company. Last year the company planned an initial public offering, which it ultimately scrapped as mortgage litigation mounted and financial markets foundered. Carpenter has repeatedly said the company's best hope for success is to distance itself from ResCap, which bogged down Ally with its bet on subprime mortgage lending that forced Ally to seek government aid.
An IPO could be a possibility after ResCap's bankruptcy and Ally's international sales are completed, Mr. Carpenter said, as could a merger or an acquisition.
"We have a lot to do right now so we have to do that first," Mr. Carpenter said.
Ally, the largest U.S. auto lender, is the former in-house financing arm of GM and was previously known as GMAC. It is now 74%-owned by the U.S. government. A significant part of the company's business remains financing GM dealers and customers, as well as those of Chrysler Group LLC.
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