TARP Assistance for the U.S. Motor Vehicle
Industry: Unwinding the Government Stake
in GMAC

Baird Webel
Specialist in Financial Economics
Bill Canis
Specialist in Industrial Organization and Business
September 13, 2012
Congressional Research Service
7-5700
www.crs.gov
R41846
CRS Report for Congress
Pr
epared for Members and Committees of Congress

TARP Assistance for the U.S. Motor Vehicle Industry: Unwinding the Government Stake

Summary
Ally Financial, formerly known as General Motors Acceptance Corporation or GMAC, provides
auto financing, insurance, online banking, and mortgage and commercial financing. For most of
its history, it was a subsidiary of General Motors Corporation, and it still provides significant
financing both for GM vehicles and for GM dealers. Like some of the automakers, it faced
serious financial difficulties due to a downturn in the market for automobiles during the 2008-
2009 financial crisis and recession, while also suffering from large losses in the mortgage
markets. With over 90% of all U.S. passenger vehicles financed or leased, GMAC’s ability to
lend, or inability to lend, was particularly important to GM’s retail sales and dealer-financing
capabilities.
The Bush and Obama Administrations used the Troubled Asset Relief Program (TARP) to fund
assistance for the U.S. auto industry, concluding that the failure of one or two large U.S.
automakers would cause additional layoffs at a time of already high unemployment, prompt
difficulties and failures in other parts of the economy, and disrupt other markets. The decision to
aid the auto industry was not without controversy, with questions raised as to the legal basis for
the assistance and the manner in which it was carried out. The nearly $80 billion in TARP
assistance for the auto industry included approximately $17.2 billion for GMAC.
The government’s aid for GMAC was accomplished primarily through U.S. Treasury purchases
of the company’s preferred shares. Many of these preferred shares were later converted into
common equity, resulting in the federal government acquiring a 73.8% ownership stake. This
conversion from preferred to common equity significantly changed the outlook for the future
government recoupment of TARP assistance. Whether the government will recoup all or most of
these funds now depends largely on the future market value of the government’s ownership stake.
If the government’s common equity ends up being worth less than the assistance provided, the
company has no responsibility going forward to compensate the government for the difference.
Conversely, if the common equity ends up being worth more than the assistance, the gain from
this difference accrues to the U.S. Treasury (and is used to pay down the national debt as
specified in the TARP statute). In addition to TARP assistance, during the financial crisis in 2008,
GMAC converted from an industrial loan company into a bank holding company, an expedited
conversion that was permitted by the Federal Reserve (Fed) due to prevailing emergency
conditions in the financial markets. This change increased access to government assistance,
including Fed lending facilities and Federal Deposit Insurance Corporation (FDIC) guarantees,
while also increasing regulatory oversight of the company.
In March 2011, Ally Financial (GMAC having changed its name in 2010) filed with the Securities
and Exchange Commission (SEC) for an initial public offering (IPO) of shares, which it expected
to launch in the second quarter of 2011. The IPO, however, was postponed because of stock
market volatility and poor performance of Ally Financial’s residential mortgage unit. It is unclear
whether an IPO will eventually occur or whether the government will dispose of its share of Ally
Financial in some other way.
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TARP Assistance for the U.S. Motor Vehicle Industry: Unwinding the Government Stake


Contents
Introduction...................................................................................................................................... 1
Why Assist Auto Financing Companies?......................................................................................... 4
Background on GMAC/Ally Financial............................................................................................ 4
Government Assistance for GMAC/Ally Financial......................................................................... 7
Federal Reserve Assistance ....................................................................................................... 7
FDIC Assistance ........................................................................................................................ 8
TARP Assistance ....................................................................................................................... 9
Ultimate Cost of Assistance to GMAC/Ally Financial.................................................................. 11

Figures
Figure 1. GMAC/Ally Financial Ownership Structure.................................................................. 11

Tables
Table 1. Summary of TARP Assistance for U.S. Motor Vehicle Industry ....................................... 2
Table 2. GMAC/Ally Financial Borrowing from the TAF and CPFF ............................................. 8
Table 3. Chronology of TARP Assistance for GMAC/Ally Financial ........................................... 10

Contacts
Author Contact Information........................................................................................................... 13

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TARP Assistance for the U.S. Motor Vehicle Industry: Unwinding the Government Stake

Introduction
In 2008 and 2009, collapsing world credit
Corporate Terminology in this Report
markets and a slowing global economy
GMAC, Inc. changed its general corporate identity to
combined to create the weakest market in
Al y Financial in May 2010, approximately a year after
decades for production, financing, and sale of
introducing the name Ally Bank for its banking subsidiary.
motor vehicles in the United States and many
This report will refer to the company as “GMAC” for
historical background and “Al y Financial” for forward-
other industrial countries. The production and
looking statements; otherwise, this report will refer to
sales slides were serious business challenges
the corporation as GMAC/Ally Financial.
for all automakers, and rippled through the
As a result of bankruptcy proceedings, there are two
large and interconnected motor vehicle
companies commonly referred to as “GM.” General
industry supply chain, touching suppliers, auto
Motors Corporation filed for bankruptcy in June 2009. In
dealers, and the communities where
this report, that company is referred to as “Old GM.” In
automaking is a major industry.
July 2009, the majority of Old GM’s assets and some of
its liabilities were purchased by a new legal entity that
was subsequently renamed “General Motors Company.”
Old GM and Old Chrysler, in addition to being
In this report, it is referred to as “New GM.” The term
affected by the downdraft of the recession,
“GM” is used when both companies are referenced.
were in especially precarious financial
Similarly, due to bankruptcy, there are two companies
positions.1 As the supply of credit tightened,
commonly referred to as “Chrysler.” Chrysler LLC filed
they lost the ability to finance their operations
for bankruptcy in April 2009. In this report, that
through private capital markets and sought
company is referred to as “Old Chrysler.” In June 2009,
federal financial assistance in 2008.
the majority of Old Chrysler’s assets and some of its
liabilities were purchased by a new legal entity that was
subsequently renamed “Chrysler Group.” In this report,
The separate companies that financed GM and
it is referred to as “New Chrysler.” The term “Chrysler”
Chrysler vehicles, GMAC and Chrysler
is used when both companies are referenced.
Financial,2 were also experiencing financial
difficulties, with GMAC suffering from large losses in the mortgage markets as well. With 91%
of U.S. passenger vehicle sales depending upon financial intermediaries to provide loans or
leases,3 the auto financing companies’ inability to lend damaged the prospects of Old GM and
Old Chrysler pulling out of the slump, particularly since other sources of credit, such as banks
and credit unions, were also reluctant to lend due to ongoing financial market disruptions.
When Congress did not pass auto industry loan legislation,4 the Bush Administration turned to the
Troubled Asset Relief Program (TARP) to fund assistance for both automakers and for GMAC
and Chrysler Financial. TARP had been created by the Emergency Economic Stabilization Act5

1 For a full analysis of the decline in U.S. and other industrial country auto manufacturing during the recent recession,
see CRS Report R41154, The U.S. Motor Vehicle Industry: A Review of Recent Domestic and International
Developments
, by Bill Canis and Brent D. Yacobucci.
2 GMAC and Chrysler Financial were founded as captive automobile credit companies; in 2006, Cerberus Capital
Management, a private equity holding company, purchased 51% of GMAC and in 2007 bought 100% of Chrysler
Financial, thereby severing each from control by the respective automakers. Unlike Old GM and Old Chrysler, neither
financing company went through bankruptcy.
3 CNW Research, “Sales by Finance Type by Month, 2005-2011,” reports that on average over the past seven years,
67% of passenger cars in the U.S. were bought with credit, 24% were leased, and 9% bought with cash.
4 In December 2008, the House of Representatives passed H.R. 7321, authorizing the use of certain Department of
Energy funds as bridge loans to GM and Chrysler. Passed 237-170, the bill was not acted upon in the Senate. For a
complete description of Congress’s consideration of auto industry loan legislation in the fall of 2008, see CRS Report
R40003, U.S. Motor Vehicle Industry: Federal Financial Assistance and Restructuring, coordinated by Bill Canis.
5 P.L. 110-343, 122 Stat. 3765.
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TARP Assistance for the U.S. Motor Vehicle Industry: Unwinding the Government Stake

(EESA) in October 2008 to address the financial crisis. This statute specifically authorized the
Secretary of the Treasury to purchase troubled assets from “financial firms,” the definition of
which did not specifically mention manufacturing companies or auto financing companies.6 The
authorities within EESA were very broad, and both the Bush and Obama Administrations used
TARP’s Automotive Industry Financing Program to provide financial assistance ultimately
totaling more than $80 billion to the two manufacturers and two finance companies. This
assistance was not without controversy, and questions were raised about the legal basis for the
assistance and the manner in which it was carried out.7
The financial assistance provided to private companies by the government during the financial
crisis can broadly be divided into (1) assistance for solvent companies facing temporary
difficulties due to the upheaval in financial markets and (2) assistance for more deeply troubled
firms whose failure was thought likely to cause additional difficulties throughout the financial
system and broader economy. As a large financial institution, GMAC might have been eligible for
various programs and loan facilities intended for solvent institutions, particularly after its
conversion to a bank holding company. Whether or not GMAC was actually solvent, however,
remains unclear. Ultimately, the TARP assistance provided to the company came from the Auto
Industry Financing Program, not the programs for assisting banks. GMAC/Ally Financial also
received assistance from Federal Reserve and Federal Deposit Insurance Corporation (FDIC)
programs intended for healthy banks facing temporary funding issues.
Table 1 below summarizes the TARP assistance given to the U.S. motor vehicle industry.8
Table 1. Summary of TARP Assistance for U.S. Motor Vehicle Industry
Principal
Principal
Current
Recouped
Losses
Income/Revenue
Government
Total
to Date by
Realized by
Received from
Outstanding
Ownership
TARP
the
the
TARP
TARP
Company
Share
Assistance Treasury
Treasury
Assistance
Assistance
Chrysler 0% $10.9
$7.9 billion
-$2.9 billion
$1.696 billion
$0
billion
Chrysler
Not
$1.5
$1.5 billion
$0
$0.02 billion
$0
Financial
Applicable
billion
GM
32%
$50.2
$23.2 billion
-$4.3 billion
$0.66 billion
$22.6 billion
(New GM)
billion
GMAC/Ally
73.8%
$17.2
$2.5 billion
$0
$3.13 billion
$14.6 billion
Financial
billion
Source: U.S. Treasury, Daily TARP Update, September 5, 2012; Troubled Asset Relief Program: Monthly 105(a)
Report
, various dates.
Notes: Figures may not sum due to rounding.

6 P.L. 110-343, Division A, Section 3.
7 See, for example, Congressional Oversight Panel (COP), September Oversight Report: The Use of TARP Funds in
Support and Reorganization of the Domestic Automotive Industry
, September 9, 2009. This panel was created by the
Emergency Economic Stabilization Act of 2008. COP’s statutory authorization and website have expired but its reports
can be found at http://cybercemetery.unt.edu/archive/cop/20110401222823/http:/cop.senate.gov/.
8 A more detailed accounting of the assistance for GM can be found in CRS Report R41401, General Motors’ Initial
Public Offering: Review of Issues and Implications for TARP
, by Bill Canis, Baird Webel, and Gary Shorter.
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Of the two auto financing companies, Chrysler Financial received relatively minor amounts of
TARP assistance ($1.5 billion) and repaid this loan relatively quickly with interest. GMAC,
however, ultimately required much more extensive assistance which resulted in the federal
government taking a majority ownership stake in the company. In addition, during the crisis,
GMAC converted from an industrial loan company into a bank holding company, an expedited
conversion permitted by the Federal Reserve due to emergency conditions in the financial
markets.9 This conversion allowed access to Federal Reserve lending facilities and also increased
regulatory oversight of the company.
In March 2011, the company, now renamed Ally Financial, filed with the Securities and Exchange
Commission (SEC) for an initial public offering (IPO) of shares. An IPO would be a major step in
unwinding the government involvement in GMAC/Ally Financial. The price at which the
government might be able to sell shares during and after an IPO would be instrumental in
determining whether the government will recoup its assistance for GMAC/Ally Financial. In July
2011, however, Ally indicated it was putting its IPO on hold because of what one news story
called the “near shutdown in global equity capital markets.”10 In November, speaking after the
company reported a $210 million loss in the third quarter of 2011, Ally’s CEO Michael Carpenter
reportedly said that the company would not issue the IPO until investors stopped thinking that
“financial stocks are the absolute worst thing you could possibly own.”11 No indication has been
made that the IPO process will be restarted and it is unclear how the government will eventually
sell its stake in Ally Financial.
In addition to auto financing, GMAC was a large participant in the mortgage markets, particularly
through subsidiaries known as ResCap. The bursting of the housing bubble and the recent
financial crisis resulted in substantially negative returns from the company’s mortgage operations
with prospects of future losses. The financial status of ResCap was a factor in Ally not issuing an
IPO in 2011. The uncertainty surrounding future losses from mortgages had been a drag on Ally
Financial and ultimately the ResCap subsidiaries filed for Chapter 11 bankruptcy in May 2012.
This bankruptcy was possible because the ResCap operations were legally separate from Ally
Financial, with Ally holding stock in these companies. Ally Financial took an approximately $1.3
billion charge due to the bankruptcy, but the company saw the action as a positive step, allowing
it to focus on its core automotive and direct banking operations.12
The authority to purchase assets under TARP expired during the 111th Congress, as did the TARP
Congressional Oversight Panel, a temporary panel created in the TARP statute.13 The 112th
Congress, however, has shown continued interest in the program with the creation of a

9 For more information on issues surrounding industrial loan companies, see CRS Report RL32767, Industrial Loan
Companies/Banks and the Separation of Banking and Commerce: Legislative and Regulatory Perspectives
, by N. Eric
Weiss. The Federal Reserve Board’s approval of the conversion can be found here: http://www.federalreserve.gov/
newsevents/press/orders/orders20081224a1.pdf.
10 “IPO View-Firms Feel the Chill as Equity Markets Freeze,” Reuters, September 30, 2011.
11 “Ally Reports $210 million Loss,” Detroit News, November 2, 2011.
12 For more information, see Ally Financial, “Ally Financial Announces Key Strategic Actions to Strengthen Company
and Accelerate Ability to Repay U.S. Treasury,” press release, May 14, 2012, http://media.ally.com/index.php?s=43&
item=543.
13 The TARP Congressional Oversight Panel held hearings and published reports on all facets of TARP support,
including the auto industry and the auto financing companies. Its final report on this sector, January Oversight Report:
An Update on TARP Support for the Domestic Automotive Industry
, was released on January 13, 2011. Although COP
has disbanded, its reports are still available at http://www.creditslips.org/creditslips/2011/04/tarp-cop-gone.html.
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TARP Assistance for the U.S. Motor Vehicle Industry: Unwinding the Government Stake

Subcommittee on TARP and Financial Services by the House Committee on Oversight and
Government Reform and oversight by the Senate Committee on Banking, Housing, and Urban
Affairs.14
The remainder of this report addresses the role that GMAC/Ally Financial plays in financing the
automobile industry, summarizes the government’s assistance to GMAC/Ally Financial, and
concludes with the outlook going forward for Ally Financial and TARP repayments.
Why Assist Auto Financing Companies?
Auto financing companies have a dual role in auto retailing. Because of the high price of motor
vehicles, more than 90% of customers finance or lease their vehicle. While outside financial
institutions such as credit unions and banks also lend to finance such purchases, the automobile
companies themselves have long offered financing and leasing to consumers through related
finance companies (such as GMAC, Chrysler Financial, Ford Motor Credit, and Toyota Motor
Credit). In addition to the financing of retail auto purchases, dealers have traditionally used the
manufacturers’ finance arms to purchase the automobile inventory from the manufacturers. These
loans are called floor plan financing.15 As the banking crisis intensified in 2008-2009, floor plan
and retail financing were seriously affected as the financing companies were unable to raise the
capital to fund the manufacturer-dealer-consumer pipeline. Thus, in order to assist the auto
manufacturers, it was deemed important to assist the auto financing companies.
Background on GMAC/Ally Financial
General Motors Acceptance Corporation (GMAC) was created by Old GM in 1919 to provide
credit for its customers and dealers. Over the decades, GMAC expanded into providing other
financial products, including auto insurance (beginning in 1939) and residential mortgages
(beginning in 1985), but remained a wholly-owned subsidiary of Old GM. GMAC’s operations
were generally profitable over the years. In 2003, for example, the company contributed $2.8
billion to Old GM’s bottom line with total assets of $288 billion.16
In 2006, Old GM spun off GMAC into an independent company, with Cerberus Capital
Management purchasing 51% of GMAC for approximately $14 billion; GM retained a 49%
share. At the time the automaker was under financial pressure to locate additional capital. In
2005, Old GM had recorded its largest annual loss since 1992, stemming primarily from its auto
business. GM’s overall corporate credit rating declined and caused GMAC’s credit rating to be

14 See, for example, U.S. Congress, Senate Committee on Banking, Housing, and Urban Affairs, TARP Oversight:
Evaluating Returns on Taxpayer Investments
, 112th Cong., 1st sess., March 17, 2011.
15 According to the Comptroller of the Currency, “Floor plan, or wholesale, lending is a form of retail goods inventory
financing in which each loan advance is made against a specific piece of collateral. As each piece of collateral is sold
by the dealer, the loan advance against that piece of collateral is repaid. Items commonly subject to floor plan debt are
automobiles, large home appliances, furniture, television and stereo equipment, boats, mobile homes, and other types of
merchandise usually sold under a sales finance contract.” Comptroller of the Currency, Administrator of National
Banks, Comptroller’s Handbook, “Floor Plan Loans (Section 210),” March 1990, p. 1.
16 General Motors Corp., Form 10-K for the fiscal year ending December 31, 2003, March 11, 2004, p. II-4 and
General Motors Acceptance Corp., Form 10-K for the fiscal year ending December 31, 2003, March 9, 2004, p. 7.
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TARP Assistance for the U.S. Motor Vehicle Industry: Unwinding the Government Stake

lowered to junk status, making it more difficult for the finance unit to raise capital. In turn, the
lower credit rating increased GMAC’s cost of financing GM vehicle sales.17 It was reported that
GMAC paid interest rates of up to 5.4 percentage points above comparable Treasury securities on
its debt, versus 1.7 to 2.7 percentage points above in 2004. It was thought that selling the
controlling stake to Cerberus would provide GMAC with lower credit costs through better access
to capital markets.18 After the spinoff, providing financing for Old GM customers and dealers
remained a large portion of GMAC’s business, and the two companies remained linked through
numerous contracts and through Old GM’s continued 49% ownership stake in GMAC.
As the early 2000s housing boom turned to the late 2000s housing bust, the previously profitable
GMAC mortgage operations began generating significant losses. GMAC was exposed to the
mortgage markets both as an investor and as a participant. For example, in 2006, GMAC held
approximately $135.1 billion in mortgage assets. GMAC’s ResCap subsidiary was the country’s
sixth-largest mortgage originator and fifth-largest mortgage servicer in 2008. GMAC as a whole
produced over $51 billion in mortgage-backed securities in that year.19
At the same time the housing market was encountering difficulties, automobile sales were
dropping, which negatively affected GMAC’s core auto financing business. In addition, GMAC,
along with nearly all financial firms, faced difficulties in accessing capital markets for funding
that previously had been relatively routine.20 Prior to the crisis, GMAC’s banking operations had
been operating as an industrial loan corporation (ILC) rather than under a federal bank holding
company charter.21 Much of the federal government support offered in response to the financial
crisis at the time, particularly the initial assistance provided under the TARP Capital Purchase
Program, was not available to GMAC because it was organized as an ILC.
GMAC applied for federal bank holding company status in November 2008, and the Federal
Reserve approved the application in an expedited manner in December 2008.22 As part of the
approval, neither Old GM nor Cerberus was allowed to maintain a controlling interest in GMAC
and some of the links between Old GM and GMAC were to be gradually unwound. Since the
transformation into a bank holding company, GMAC has renamed itself Ally Financial, Inc. and
has expanded its depository banking operations under the name Ally Bank.23
Following the government assistance and restructuring of the auto industry, GMAC/Ally
Financial has provided much of the floor plan and retail financing for New GM and New

17Congressional Oversight Panel, January Oversight Report: An Update on TARP Support for the Domestic Automotive
Industry
, January 13, 2011, p. 72.
18 “GM Sells Finance Stake, Board Supports Wagoner,” CNNMoney, April 3, 2006.
19 Statistics from Inside Mortgage Finance, 2009 Mortgage Market Statistical Annual, vol. I, p. 41, 157, vol. II, pp.
271-273.
20 For more information on the financial crisis from 2007 to 2009, see CRS Report RL34182, Financial Crisis? The
Liquidity Crunch of August 2007
, by Darryl E. Getter et al. and CRS Report R40173, Causes of the Financial Crisis, by
Mark Jickling.
21 For more information on ILCs, see CRS Report RL32767, Industrial Loan Companies/Banks and the Separation of
Banking and Commerce: Legislative and Regulatory Perspectives
, by N. Eric Weiss.
22 See Federal Reserve System “Order Approving Formation of Bank Holding Companies and Notice to Engage in
Certain Nonbanking Activities,” December 24, 2008, available at http://www.federalreserve.gov/newsevents/press/
orders/orders20081224a1.pdf.
23 Ally Financial, “Ally Financial Statement on New Corporate Brand,” press release, May 10, 2010,
http://media.ally.com/index.php?s=43&item=401.
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TARP Assistance for the U.S. Motor Vehicle Industry: Unwinding the Government Stake

Chrysler. The relationship among the companies, however, is in flux. New GM acquired
AmeriCredit Corporation, and renamed it General Motors Financial Company, a subsidiary now
competing with GMAC/Ally Financial.24 GM Financial plans to expand its floor plan financing
for dealers, contending that it will provide new financing options for them. A GM executive said
that leaving Ally Financial with most of GM’s auto financing was “a risk to GM that is
unacceptable,” citing the possibilities that Ally could either curtail its dealer lending or might
someday be purchased by another bank that would not want to engage in auto financing.25 GM
Financial reportedly would like to boost its share of the GM auto finance market to 20%, increase
its share of subprime lending, and increase leasing (including in Canada where Ally cannot offer
leasing under Canadian banking rules).26
GM and Ally Financial’s relationship is further complicated by GM’s interest in purchasing Ally’s
international auto lending operations, which would more than double the assets of GM Financial,
if the sale is completed. Ally put these assets up for bid in July 2012, and GM’s finance unit is
reportedly one of 30 bidders.27
As of June 30, 2012, Ally Financial was the 15th-largest U.S. bank holding company, with
approximately $178.6 billion in total assets.28 In the latest annual filings with the Securities and
Exchange Commission (SEC),29 Ally reports three major lines of business:
Automotive financing. Ally Financial’s Global Automotive Services unit held
approximately $120.5 billion in assets, split between North American financing
($97.0 billion), international financing ($15.5 billion), and insurance operations
($8.0 billion).
Residential mortgages. Ally Financial’s mortgage origination and servicing
operations held approximately $33.9 billion in assets as of the end of 2011 and
originated or purchased $56.3 billion in mortgages in 2011. (This report was
prior to the May 2012 ResCap bankruptcy filing noted above.)
Depository banking. Ally Bank had $39.6 billion in total deposits at the end of
2010, with $27.7 billion of this from retail customers.
GMAC/Ally Financial’s participation in mortgage markets has led to further interactions with
TARP as the company participates in the TARP Home Affordable Modification Program
(HAMP), with more than 41,000 active permanent modifications under HAMP at the end of June
2012.30 GMAC/Ally Financial has received approximately $171 million in incentive payments for

24 A report by the TARP Congressional Oversight Panel (COP) considered the effect of GM’s purchase of Americredit
on GMAC/Ally Financial. In the report, COP foresaw that GM’s Americredit unit might compete against GMAC/Ally
Financial and make it more difficult for taxpayers to recoup their investment in GMAC/Ally Financial. See
Congressional Oversight Panel, January Oversight Report: An Update on TARP Support for the Domestic Automotive
Industry
, January 13, 2011.
25 “GM Financial to Offer Floorplan Loan Program for Dealers,” Automotive News, June 1, 2011.
26 “GM Financial Goes after Canadian Leasing, Subprime Markets,” Detroit News, June 2, 2011.
27 Rick Rothacker, “GM Unit Bids for Ally International Businesses,” Reuters, August 13, 2012.
28 “Top 50 Bank Holding Companies,” available from the Federal Financial Institutions Examination Council at
http://www.ffiec.gov/nicpubweb/nicweb/top50form.aspx.
29 Ally Financial, Form 10-K for the fiscal year ending December 31, 2011, February 28, 2012. Statistics from pp. 1-5.
30 U.S. Treasury, Making Home Affordable Program: Performance Report through June 2012, August 3, 2012, p. 12,
available at http://www.treasury.gov/initiatives/financial-stability/results/MHA-Reports/Documents/
August%202011%20MHA%20Report%20FINAL.PDF. For more information on HAMP, see CRS Report R40210,
(continued...)
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participating in HAMP.31 The company has faced criticism for documentation issues in its
foreclosure proceedings. In 2010, the company temporarily suspended foreclosure proceedings in
many states, and it was named in lawsuits filed by some of those affected by its foreclosure
actions or on their behalf.32 In February 2012, Ally Financial reached an agreement in principle
with the federal government and 49 states to address the foreclosure-related complaints, resulting
in a $230 million charge to the company’s 2011 earnings.33
Government Assistance for GMAC/Ally Financial
GMAC/Ally Financial benefited from both general and specific government assistance during the
financial crisis. Such assistance included (1) Federal Reserve lending facilities, where an
institution could borrow cash from the Fed in return for less liquid securities; (2) the FDIC’s
Temporary Liquidity Guarantee Program (TLGP), which guarantees debt issued by banks; and (3)
the Troubled Asset Relief Program, which primarily provided additional capital to strengthen the
company’s balance sheet.
Federal Reserve Assistance
Historically, the Federal Reserve has declined to identify individual institutions to which it loans
funds. GMAC itself, however, reported that at the end of 2008, that it had $7.6 billion outstanding
from the Federal Reserve Commercial Paper Funding Facility.34 The Dodd-Frank Wall Street
Reform and Consumer Protection Act,35 passed in July 2010, requires the Fed to detail its
emergency lending through the financial crisis; details of such lending were released in late 2010.
This release did not include borrowing from non-emergency facilities, such as the discount
window. Table 2 summarizes the information released by the Federal Reserve regarding
GMAC/Ally Financial’s borrowing from the Commercial Paper Funding Facility (CPFF) and the
Term Auction Facility (TAF).36

(...continued)
Preserving Homeownership: Foreclosure Prevention Initiatives, by Katie Jones.
31 U.S. Treasury, Troubled Asset Program Monthly 105(a) reports—July 2012, August 10, 2012, p. 107; available at
http://www.treasury.gov/initiatives/financial-stability/reports/Documents/July%202012%20Monthly%20Report.pdf.
32 See, for example, “JPMorgan, Ally Face ‘Hydra’ of Foreclosure Probes,” Bloomberg Businessweek, Oct. 6, 2010,
available at http://www.businessweek.com/news/2010-10-06/jpmorgan-ally-face-hydra-of-foreclosure-probes.html.
33 Ally Financial, Form 10-K for the fiscal year ending December 31, 2011, February 28, 2012, p. 31.
34 GMAC LLC., Form 10-K for the fiscal year ending December 31, 2008, February 29, 2009, p. 69.
35 P.L. 111-203, 124 Stat. 1376.
36 For additional detail on the operation of these Fed lending programs, see CRS Report RL34427, Financial Turmoil:
Federal Reserve Policy Responses
, by Marc Labonte.
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Table 2. GMAC/Ally Financial Borrowing from the TAF and CPFF
($ in billions)
Outstanding Borrowing
Date Program
(at month’s end)
Interest Rate
October 31, 2008
CPFF
$5.6
3.88% to 3.60%


November 30, 2008
CPFF
$6.4
3.88% to 3.42%;
TAF
$0.01
0.6%
December 31, 2008
CPFF
$7.5
3.88% to 3.21%;
TAF
$0.01
0.6%
January 31, 2009
CPFF
$7.9
3.52% to 3.18%
February 28, 2009
CPFF
$7.1
3.39% to 3.18%
March 31 2009
CPFF
$6.1
3.24% to 3.18%
April 30, 2009
CPFF
$0
none
June 30, 2009
TAF
$2.0
0.25%
July 31, 2009
TAF
$2.0
0.25%
August 31, 2009
TAF
$4.1
0.25%
September 20, 2009
TAF
$4.0
0.25%
October 31, 2009
TAF
$4.0
0.25%
November 30, 2009
TAF
$5.0
0.25%
December 31, 2009
TAF
$5.0
0.25%
January 31, 2010
TAF
$2.0
0.25%
February 28, 2010
TAF
$0.75
0.25%
March 31, 2010
TAF
$0.75
0.50%
April 30, 2010
TAF
$0
none
Source: CRS calculations with Federal Reserve CPFF and TAF data.
Note: The CPFF and TAF closed to new borrowing in February 2010 and March 2010 respectively.
FDIC Assistance37
As part if its response to the then-ongoing financial crisis, the FDIC created the Temporary
Liquidity Guarantee Program (TLGP) to encourage liquidity in the banking system.38 One
component of this program guarantees senior unsecured debt issued by banks before October 31,
2009, with coverage until December 31, 2012. Based on its size, GMAC/Ally Financial was
eligible to issue up to $7.4 billion of debt under the program and it did so in three tranches: $2.9
billion in October 2009 and $3.5 billion and $1 billion in December 2009. This debt will mature

37 For more information on the FDIC, see CRS Report R41718, Federal Deposit Insurance for Banks and Credit
Unions
, by Darryl E. Getter and Victor Tineo.
38 See the initial announcement at http://www.fdic.gov/news/news/press/2008/pr08100.html. See also
http://www.fdic.gov/news/news/press/2008/pr08105.html, which provides further details of the program.
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in October 2012 and December 2012 respectively. In return for the guarantee, the FDIC received
approximately $393 million in fees from GMAC/Ally Financial.
TARP Assistance
GMAC applied for the Treasury’s TARP Capital Purchase Program in 2008 at the same time as it
applied to the Fed for permission to convert to a bank holding company. By the time the
application was approved, Treasury had announced the Auto Industry Financing Program
(AIFP)39 and the assistance received by GMAC/Ally Financial came under this program rather
than the TARP bank assistance programs. GMAC received three large rounds of assistance
through TARP: (1) $5.25 billion on December 30, 2008, (2) $7.5 billion on May 21, 2009, and (3)
$3.98 billion on December 30, 2009. This assistance was provided through the purchase of
various types of preferred equity in GMAC, including mandatory convertible preferred stock and
trust preferred securities. Holders of preferred equity are entitled to dividends before any dividend
is paid to holders of common stock, but they have no voting rights in the company. The Treasury
received warrants for approximately $825 million in additional preferred equity in conjunction
with these transactions and the preferred stock has paid dividends since its purchase. In addition
to the direct assistance for GMAC/Ally Financial, the company also received indirect TARP
assistance in the form of an $884 million loan to Old GM for participation in a December 2008
rights offering for GMAC common stock.
In early 2009, the Treasury and banking regulators conducted stress tests on large banks,
including on GMAC. These tests were intended to identify financial institutions that needed
additional capital. Such banks were to be eligible for the new TARP Capital Assistance Program
if they proved unable to raise needed capital from the private markets. Ultimately the banks
judged to need additional capital were able to raise this capital from the private market and the
Capital Assistance Program was never used. GMAC, however, was unable to raise capital from
the private market and instead received the two additional rounds of assistance from TARP’s Auto
Industry Financing Program detailed above.
Since the initial assistance in 2008, the government not only injected additional capital into
GMAC/Ally Financial, but also changed the form of the government investment. The $884
million loan to Old GM was converted in May 2009 into approximately 35% of common equity
held by the U.S. Treasury. In December 2009, $3 billion of preferred shares was converted into an
additional 21% of common equity, raising the federal ownership to more than 56%. The warrants
that came along with the assistance were also exercised. In December 2010, $5.5 billion of
preferred equity was converted into approximately 17.5% of the company’s common equity,
raising federal ownership to 73.8%. The other large shareholders are the GM Trust (9.9%) and
Cerebus Capital (8.7%).
The U.S. Treasury recouped $2.54 billion of the principal to GMAC/Ally Financial through a sale
of preferred equity and GMAC/Ally Financial has paid approximately $3.13 billion in dividends
and other income to the government since the government investment began.40 In total, the
government now holds 73.8% of Ally Financial’s common equity and $5.9 billion of preferred
equity.

39 The other three AIFP recipients were Chrysler Financial, Chrysler, and General Motors.
40 U.S. Treasury, Daily TARP Update, September 5. 2011.
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Table 3 details the TARP assistance for the company. Figure 1 shows the ownership structure
that has resulted from the conversion of TARP assistance into common equity.
Table 3. Chronology of TARP Assistance for GMAC/Ally Financial
Date
Company
Type of Assistance
Amount
Assistance from the Government
December 2008
GMAC
Preferred Stock Purchase
$5.0 billion
December 2008
Old GM
Loan
$884 million
May 2009
GMAC
Preferred Stock Purchase
$7.5 billion
December 2009
GMAC
Trust Preferred Securities
$2.54 billion
Purchase
December 2009
GMAC
Preferred Stock Purchase
$1.25 billion
Recompense to the Government
December 2008-present
GMAC/Ally Financial
Dividends
$3.0 billion
December 2008
GMAC
Warrants
$250 million
(exercised on receipt)
May 2009
GMAC
Warrants
$375 million
(exercised on receipt)
December 2009
GMAC
Warrants
$190 million
(exercised on receipt)
March 2011
Public Offering by the U.S.
Trust Preferred Securities
$2.54 billion (principal);
Treasury
Sale
$0.13 billion (other
income)
Equity Exchange
May 2009
Old GM/U.S. Treasury
Loan to Common Equity
$884 million for 35.4% of
GMAC common equity
December 2009
GMAC/U.S. Treasury
Preferred Equity to
$3 billion for 20.9% of
Common Equity
common equity
December 2010
GMAC/U.S. Treasury
Preferred Equity to
$5.5 billion for 17.5% of
Common Equity
common equity
Source: U.S. Treasury, Troubled Asset Relief Program: Monthly 105(a) Report, various dates.
Note: The December 2008 loan of $884 million was made to Old GM for participation in GMAC’s rights
offering.
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Figure 1. GMAC/Ally Financial Ownership Structure
December 2010-present

Source: Ally Financial
Ultimate Cost of Assistance to GMAC/Ally
Financial

The TARP assistance for GMAC/Ally Financial, like most of the TARP assistance, was initially
provided through financial instruments that were expected to be repaid or repurchased by the
recipients. Subsequently, however, the U.S. Treasury converted much of the GMAC/Ally
Financial assistance into common equity in the company. Common equity is not expected to be
repaid by the company, but represents an ownership stake, and possibly control, of the company.
This conversion means that whether the government recoups its assistance will depend on the
market value when the government sells this equity. If the government’s common equity stake
ends up being sold for less than the amount of the government’s investment, Ally Financial has no
responsibility to compensate the government for the difference. If Ally Financial’s value is
sufficiently high, however, the government may end up making a greater gain on the assistance
than it would have had the preferred shares not been converted into common equity. As specified
by the TARP statute, any proceeds “shall be paid into the general fund of the Treasury for
reduction of the public debt.”41
The experience of other large TARP recipients may be instructive:
Citigroup. Early in 2009, $25 billion of TARP assistance to Citigroup was
converted into approximately 34% of the equity in the company, which has now
been sold to private investors. This conversion proved beneficial for the
government, with a capital gain of approximately $6.9 billion from the stock sale.
Other cases, however, have yet to provide similar gains.

41 P.L. 110-343, §106(d).
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General Motors. In the case of New GM, approximately $40 billion in loans
was converted into 60.8% of the common equity in the company. The December
2010 partial sale of the U.S. government’s New GM stock, which reduced
government ownership to 32%, was booked by the Treasury as a $4.3 billion loss,
since the shares sold for less than the amount of that portion of the original loan
which was converted into common shares. It is possible that future stock
appreciation might lead to offsetting gains when the 32% stake is sold, although
the stock would have to rise significantly for this to be the case.42
AIG. In early 2011, $49.1 billion of TARP preferred share holdings was
converted into common equity in AIG. Combined with equity resulting from an
earlier Federal Reserve loan, Treasury’s holding of AIG equity totaled
approximately 92%. The initial May 24, 2011, sale of the government’s AIG
stock reduced the Treasury’s holdings to 77% of the company. Subsequent sales
of stock have reduced the Treasury’s holdings to 15.9% of the company. The
sales have occurred at stock prices between $29.00 and $32.50 per share, all
above the $28.73 per share that Treasury calculates as its cost on a cash basis.
Chrysler. Treasury’s 6.6% common equity holdings in New Chrysler were sold
to Fiat in a direct sale for $500 million, with another $60 million paid for equity
rights that were held by the U.S. Treasury. This severed the U.S. government’s
financial relationship with the company through TARP. The government failed to
recoup approximately $1.3 billion of the assistance provided to Chrysler, a figure
that does not take into account other economic factors, such as the Treasury’s
borrowing costs and the possibility of a risk premium to compensate the
taxpayers for the riskiness of the assistance.43 Were those factors also included,
the government’s cost of the loans to all the auto industry TARP recipients would
be higher.
Estimates of the value of Ally Financial are affected by an absence of market information similar
to the situation with GM prior to its IPO. Ally Financial reported total assets of $178.6 billion
compared with liabilities of $160.2 billion at the end of the second quarter of 2012,44 for a “book
value” of approximately $18.4 billion. The Congressional Oversight Panel reported that the 35
companies used by the Treasury as “comparables” for Ally Financial have traded at between
102% and 135% of book value.45 This suggests a value of the entire company of between $18.8
billion and $24.8 billion and a value of the government’s equity stake between $13.9 billion and
$18.3 billion. If the government could indeed sell the 73.8% equity for approximately this value,
and recover the $5.9 billion holdings of preferred equity, the government would recoup more than
the nominal amount of its total assistance for the company. Whether or not the government’s

42 New GM’s IPO was set at $33 a share in November 2010; for the federal government to break even on its investment
in New GM, the remaining U.S. Treasury’s remaining 32.04% stake would need to sell for approximately $54 a share.
See CRS Report R41401, General Motors’ Initial Public Offering: Review of Issues and Implications for TARP, by Bill
Canis, Baird Webel, and Gary Shorter. On May 16, 2011, the stock was trading at just over $24, 27% less than at the
time of the IPO.
43 See CRS Report R41940, TARP Assistance for Chrysler: Restructuring and Repayment Issues, by Baird Webel and
Bill Canis.
44 Ally Financial, Form 10-Q for the quarter ending June 30, 2012, August 3, 2012, p. 5.
45 Congressional Oversight Panel, An Update on TARP Support for the Domestic Automotive Industry, January 13,
2011, p. 89.
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stake will ultimately return this amount, however, is an open question. The recent experience with
AIG and GM stock illustrates the uncertainties in this process.

Author Contact Information

Baird Webel
Bill Canis
Specialist in Financial Economics
Specialist in Industrial Organization and Business
bwebel@crs.loc.gov, 7-0652
bcanis@crs.loc.gov, 7-1568



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