{ "id": "R41846", "type": "CRS Report", "typeId": "REPORTS", "number": "R41846", "active": true, "source": "EveryCRSReport.com, University of North Texas Libraries Government Documents Department", "versions": [ { "source": "EveryCRSReport.com", "id": 437575, "date": "2015-01-26", "retrieved": "2016-04-06T19:36:04.364204", "title": "Government Assistance for GMAC/Ally Financial: 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. 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 more than 90% of all U.S. passenger vehicles financed or leased, GMAC\u2019s inability to lend was particularly threatening to GM\u2019s retail sales and dealer-financing capabilities.\nThe Bush and Obama Administrations used the Troubled Asset Relief Program (TARP) to provide 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, which changed its name to Ally Financial in 2010.\nThe government\u2019s aid for GMAC was accomplished primarily through U.S. Treasury purchases of the company\u2019s 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 the TARP assistance. After such a conversion, if the government\u2019s common equity were to end up being worth less than the assistance provided, the company would have no responsibility to compensate the government for the difference. Conversely, if the common equity were to be worth more than the assistance, the gain from this difference would accrue to the U.S. Treasury (and be used to pay down the national debt, as specified in the TARP statute). \nBeginning in November 2013, the government\u2019s stake in Ally Financial began dropping due to share dilution and the sale of the government\u2019s stock through both private placements and open market sales. The final sale of the government\u2019s Ally stock was completed in December 2014. With the completion of the sale, the government received a total of $14.7 billion in repayment for its assistance, leading the Treasury to recognize a loss of $2.5 billion. However, the government also received $4.9 billion in dividends and other income due to the TARP assistance to GMAC/Ally Financial.\nIn 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, and also increased regulatory oversight of the company.", "type": "CRS Report", "typeId": "REPORTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/R41846", "sha1": "b5ff9dc377c386b536f523c9f6be9f508268fcc4", "filename": "files/20150126_R41846_b5ff9dc377c386b536f523c9f6be9f508268fcc4.html", "images": null }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/R41846", "sha1": "0737ad1b90b14b79bc2fd115516d43317efc3815", "filename": "files/20150126_R41846_0737ad1b90b14b79bc2fd115516d43317efc3815.pdf", "images": null } ], "topics": [] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc462857/", "id": "R41846_2014Sep03", "date": "2014-09-03", "retrieved": "2014-12-05T09:57:41", "title": "Government Assistance for GMAC/Ally Financial: Unwinding the Government Stake", "summary": "This report explains the governments relationship with Ally Financial (formerly known as General Motors Acceptance Corporation, or GMAC). Under the Troubled Assets Relief Program (TARP) the government purchased preferred shares in Ally Financial, acquiring a 73.8% ownership state. This report discusses the reasoning behind this assistance to Ally and the ultimate costs.", "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20140903_R41846_70f254c05f884e0b6df11ba93445f4303ff6fa65.pdf" }, { "format": "HTML", "filename": "files/20140903_R41846_70f254c05f884e0b6df11ba93445f4303ff6fa65.html" } ], "topics": [ { "source": "LIV", "id": "Government and business", "name": "Government and business" }, { "source": "LIV", "id": "Automobile industry", "name": "Automobile industry" }, { "source": "LIV", "id": "Government ownership", "name": "Government ownership" }, { "source": "LIV", "id": "Economic stabilization", "name": "Economic stabilization" } ] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc282332/", "id": "R41846_2014Feb10", "date": "2014-02-10", "retrieved": "2014-04-02T19:38:14", "title": "Government Assistance for GMAC/Ally Financial: Unwinding the Government Stake", "summary": "This report discusses the auto financing industry, particularly Ally Financial, formerly known as General Motors Acceptance Corporation or GMAC.", "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20140210_R41846_f583c85b04c034ba42cb2dd3db7f3401d6bccad6.pdf" }, { "format": "HTML", "filename": "files/20140210_R41846_f583c85b04c034ba42cb2dd3db7f3401d6bccad6.html" } ], "topics": [ { "source": "LIV", "id": "Finance", "name": "Finance" }, { "source": "LIV", "id": "Automobile industry", "name": "Automobile industry" }, { "source": "LIV", "id": "Government buyouts", "name": "Government buyouts" } ] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc122209/", "id": "R41846_2012Sep13", "date": "2012-09-13", "retrieved": "2012-11-30T09:28:34", "title": "TARP Assistance for the U.S. Motor Vehicle Industry: Unwinding the Government Stake in GMAC", "summary": "This report discusses government support given to Ally Financial, formerly known as General Motors Acceptance Corporation (GMAC), which provides auto financing, insurance, online banking, and mortgage and commercial financing. This report looks at how or even it GMAC will be able to pay back the government for Trouble Asset Relief Program (TARP) funding.", "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20120913_R41846_e7676c5349186d9fbdbb960671742f3c80e07070.pdf" }, { "format": "HTML", "filename": "files/20120913_R41846_e7676c5349186d9fbdbb960671742f3c80e07070.html" } ], "topics": [ { "source": "LIV", "id": "Finance", "name": "Finance" }, { "source": "LIV", "id": "Financial crises", "name": "Financial crises" }, { "source": "LIV", "id": "Economic stabilization", "name": "Economic stabilization" }, { "source": "LIV", "id": "Economic policy", "name": "Economic policy" }, { "source": "LIV", "id": "Government regulation", "name": "Government regulation" } ] } ], "topics": [ "Economic Policy" ] }