Ally IPO to come sooner rather than later

As we said in an earlier post, there is no way that the Treasury will get anywhere near their investment of $17.2 BB from Ally (formerly known as GMAC).

This of all the bailouts was the most pointless.  GMAC was deemed "critical" to the success of GM.

There are three reasons why this was not the case:
  1. GM already has bought AmeriCredit, another automotive financing company.  Apparently, GMAC was not the only company in the world that could finance auto loans. 
  2. Ally has already diversified out of auto finance.  They already had huge mortgage exposure, just add credit card and commercial finance and you have a company which has little need to finance cars. 
  3. Didn't GM go bankrupt anyway?  Wasn't the point that without GMAC, GM would go under? 
When we hear of the IPO, just remember how much the Treasury put into GMAC before you buy the line that we are getting repaid, i.e. $17.2 BB. 

Via Bloomberg:
Ally Financial Inc., the auto lender formerly known as GMAC Inc., will sell shares to the public sooner than government officials expected, U.S. Treasury Secretary Timothy Geithner said.

“We’re working very hard with the management and board of GMAC to achieve that outcome,” Geithner said today, referring to an initial public offering, in testimony to the Congressional Oversight Panel for the Troubled Asset Relief Program in Washington. “I don’t know how quickly but it’s going to be much sooner than we thought six months ago.”

An IPO would allow the government to begin withdrawing its support of Ally as officials look to exit bailouts undertaken during the financial crisis. General Motors Co. said today it paid $2.1 billion to repurchase preferred shares owned by taxpayers.


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