By Andrew R. Johnson
Ally Financial Inc. said Wednesday it repaid $5.9 billion of its
$17.2 billion bailout as the auto lender works to get out from
government ownership.
The move puts the government a step closer to exiting its stake
in the Detroit-based company, which struggled under the weight of
subprime mortgage losses during the financial crisis that almost
led to the firm's collapse.
"Taxpayers are now in a stronger position to maximize the value
of their remaining investment in Ally," Timothy Bowler, deputy
assistant secretary of the Treasury, wrote in a Treasury blog post
Wednesday. He added that Treasury "will work with Ally on a public
offering or private sale of its common shares or sales of assets to
complete its exit."
Ally Chief Executive Michael Carpenter has previously said an
IPO or private transaction could be options as the U.S. government
looks to exit its remaining stake in the company.
Ally on Friday said it expected to repurchase $5.9 billion of
preferred shares owned by the Treasury after the Federal Reserve
said it didn't object to revised capital plan from the company.
Including Wednesday's announcement, Ally has repaid $12.3 billion
of its bailout, Mr. Bowler wrote.
"Looking ahead, we will be focused on taking steps to further
improve profitability, maintain strong core auto finance and direct
banking franchises and fully exit the Troubled Asset Relief
Program," Mr. Carpenter said in a statement on Wednesday.
The Fed in March rejected a plan Ally submitted under the
regulator's stress tests of big banks, deeming its capital levels
would be too low to survive an economic downturn.
The move was a blow to the company, which has worked to dig its
way out of legal issues largely tied to its subprime-mortgage
subsidiary, Residential Capital LLC, which filed for Chapter 11
bankruptcy last year. The final goal is repayment of the
bailout.
To boost its capital levels and move ahead on those plans, Ally
said in August it would sell shares through a private placement of
common stock to about a dozen investors and seek permission to
repurchase the preferred shares from Treasury.
Ally said Wednesday that it completed the private sale of
216,667 shares for about $1.3 billion.
The moves reduced Treasury's ownership of Ally to about 64% from
74%.
Mr. Bowler is in line to head manage the government's crisis
relief programs, succeeding Timothy Massad as Assistant Secretary
for Financial Stability, a Treasury spokesman said Wednesday. The
position includes unwinding the government's investments in banks
under the Troubled Asset Relief Program.
Mr. Massad is President Barack Obama's pick to head the
Commodity Futures Trading Commission, though he must be approved by
the Senate for the position.
-Ryan Tracy contributed to this article.
Write to Andrew R. Johnson at andrew.r.johnson@dowjones.com
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