Tag Archive | "Ally Financial"

Treasury Names Appointees to Ally Board of Directors

WASHINGTON The U.S. Department of the Treasury exercised its right to appoint two directors to the Ally Financial Inc. (Ally) board of directors, naming Henry Miller and Gerald Greenwald. The appointments, as well as the reelection of the current members of the board, were approved earlier today at a meeting of Ally’s common stockholders.

“These two individuals will make a valuable contribution to the board as Ally moves forward on its continued efforts to repay taxpayers and support the auto industry recovery,” said Assistant Secretary for Financial Stability Timothy G. Massad.

Greenwald is a founder of Greenbriar Equity Group, a private equity firm focused on the global transportation sector. From 1994 until 1999, Greenwald was chairman and CEO of United Airlines, where he helped return the company to profitability. Greenwald has also served as a managing director of Dillon Read & Co., and President and Co-Chief Executive Officer of Olympia & York.

He began his career in the automobile industry at Ford Motor Co., where he worked in several positions, including controller, director of Ford’s operations in Europe, and as president of Ford of Venezuela. He was later employed by Chrysler Corp., where he worked in various positions, including corporate controller and chief financial officer, before becoming vice chairman.  Greenwald received a BA from Princeton University and an MA from Wayne State University.

Miller has served as Chairman of Marblegate Asset Management LLC since its formation in 2009. He was also Co-founder, Chairman, and Managing Director of Miller Buckfire & Co. LLC from 2002 until his retirement in June 2011 and Chief Executive Officer until December 31, 2009. Over the course of his career, Miller has had extensive experience in restructurings and has worked on a number of complex cases. Previously, he was vice chairman and managing director at Dresdner Kleinwort Wasserstein, where he was the head of the financial restructuring group.

Prior to that, Miller was Managing Director and Head of both the Restructuring Group and Transportation Industry Group of Salomon Brothers. Miller joined Salomon Brothers from Prudential Securities, where he was a Managing Director, Co-Head of Investment Banking, and Head of the Financial Restructuring Group. From 1977 to 1986, he was employed by Lehman Brothers, was appointed a Partner in 1981, and, among other positions, was Head of the Private Finance Group in Corporate Finance. Miller received his B.A. from Fordham University College of Arts and Sciences and an MBA from Columbia University’s Graduate School of Business.

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Government Watchdog Calls for GM, Ally Exit Plan

WASHINGTON — A subcommittee of the U.S. House Oversight Committee will hear testimony today from government watchdog Christy Romero, who said that the Obama administration must conjure a plan on how to sell the government’s stake in General Motors Co.

Romero — special inspector general for the corporate bailout initiative, the Troubled Asset Relief Program — offered her opinion on what is expected to be one of the highly contested issues heading into the November presidential election. While Romero disagrees with calls from the Republican-led House Oversight Committee to sell share below break-even prices, she said the Obama administration must come up with a plan for the Treasury to rid its stake in GM and Ally.

“Although that would result in taxpayers getting out of these investments more quickly, it would decrease taxpayer return,” Romero said of selling share below break-even prices. “Treasury should develop a concrete exit plan for GM and Ally.”

Romero said the U.S. Treasury would have to sell off its remaining 500 million shares at more than $52 each in order to break even on a bailout for GM, which would take years.

The Treasury has invested more than $50 million in GM, but has not sold any shares since 2010. The stock is currently trading at just above $20, down from its initial public offering price of $33 in November 2010. Taxpayers currently hold a 30 percent stake in the company.

As for Ally, previously known as GMAC, the government infused the former captive lender with $17 billion through multiple bailouts during the credit crisis and now owns more than 70 percent of the company. The former captive lender filed its intent to offer shares to the public back in March, but has since delayed plans to begin marketing its IPO.

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RV Maker Adds Ally as Floorplan Financing Source

DETROIT – RV manufacturer Forest River Inc. selected Ally Financial as an additional provider for dealer inventory financing. The agreement is effective immediately.

Ally Financial will participate in Forest River Inc.’s interest reimbursement program for RV dealers. Eligible dealers can receive an interest rebate from the RV maker for units sold to retail customers within 90 days of invoice. “Ally Financial is a proven financial services provider with nationwide scale for the U.S. RV industry, and we are pleased to develop this relationship for our dealer network,” said Joseph Greenlee, CFO of Forest River Inc. In addition to wholesale financing, Ally will offer dealer real estate and commercial loans, inventory insurance, remarketing services for RV trade-ins, and consumer financing to support new and used RV sales.

Forest River Inc., a Berkshire Hathaway company, currently has manufacturing in six U.S states and employs more than 8,000 employees. The company also sells to independent dealers in the United States and Canada. “Forest River is a quality manufacturer that expects a world class financing experience with attractive terms,” said Mark Manzo, vice president of alliance sales for Ally Financial.

“We have the infrastructure and capabilities to meet those needs, and Ally welcomes the opportunity to grow its RV portfolio while serving Forest River dealers and their customers.”

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Ally’s ResCap Files For Bankruptcy Protection

DETROIT — Hoping to strengthen its financial position and accelerate its repayment of the U.S. Treasury’s investment, Ally Financial announced yesterday that its mortgage subsidiary, Residential Capital LLC, has filed for Chapter 11 bankruptcy protection in New York.

The company also announced that it is exploring the possible sale of its international operations. Company officials said these actions will enable Ally to further invest in and grow its U.S.-based automotive services. They added that these decisions will put the company in a better position to return additional capital to the U.S. taxpayer by year-end.

“The action by ResCap will enable Ally to achieve a permanent solution to its legacy mortgage risks and put these issues behind us,” said Ally CEO Michael A. Carpenter. “This action, along with pursuing alternatives for the international businesses, will allow Ally to focus 100 percent of its energies on further strengthening its already leading U.S. auto finance and direct banking franchises.”

Ally has paid approximately $5.5 billion to the U.S. Treasury, about one-third of the investment made in the company. Upon successful completion of the announced strategic initiatives, Ally expects to have returned a total of two-thirds of the taxpayer’s investment.

ResCap filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code. In connection with the Chapter 11 filing, ResCap announced it has reached agreement with key creditors, including Ally, on the terms of a prearranged Chapter 11 plan.

Ally Financial, Ally Bank and all other Ally entities are not part of the ResCap Chapter 11 cases and there will be no change or interruption to Ally’s business operations, officials said. In addition, ResCap and its origination and servicing platform are expected to continue normal operations through the process.

Ally also has agreed to take certain steps to support the stability of ResCap and its mortgage servicing platform, including making a $750 million contribution to the ResCap Chapter 11 estate upon confirmation of the plan. The finance source will also make a stalking horse bid for up to $1.6 billion of ResCap-owned mortgages currently marked at 45 percent of UPB.

ResCap has also obtained support for its prearranged Chapter 11 restructuring from the ad hoc steering committee representing ResCap’s junior secured notes, as well as other certain note holders. To date, the company has gained support from entities holding $781 million of these notes.

Ally is expected to record an associated charge of approximately $1.3 billion in the second quarter of 2012. The estimated charge is primarily driven by a write-down to zero of Ally’s approximate $400 million equity investment in ResCap, the $750 million cash contribution and approximately $130 million related to the establishment of a mortgage repurchase reserve at Ally Bank that replaces a reserve previously held at ResCap.

Officials said ResCap would have required billions of dollars of support from its parent to meet its obligations, which would have substantially delayed Ally’s plans to repay the remaining capital investment to the U.S. Treasury, officials said.

“The decision by the ResCap board to pursue this course will best enable it to preserve more than 3,500 jobs and keep its talented workforce focused on assisting homeowners by servicing the more than 2.4 million loans in its portfolio,” Carpenter said.

International Businesses Ally, which operated independently of the company’s U.S. operations, will also explore strategic alternatives for all of its international operations, which includes auto finance, insurance, and banking and deposit operations in Canada, Mexico, Europe, the U.K. and South America.

Since 2009, Ally has been an instrumental part of the U.S. auto recovery and, through its automotive finance operation, has provided financing for nine million vehicles sold to more than 6,000 U.S. auto dealers and has assisted American consumers in financing vehicles worth almost $100 billion.

“Ally was a key part of supporting the recovery of the U.S. auto industry by ensuring that thousands of dealers and millions of consumers had access to financing during the crisis,” Carpenter said. “We took that responsibility very seriously and take equally seriously the mission to repay the remaining U.S. taxpayer investment in full as soon as possible.”

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Chrysler Won’t Renew Deal With Ally

AUBURN HILLS – Chrysler Group LLC notified Ally Financial Inc. that it will not renew its auto finance agreement with the former captive, according to the carmaker’s April 25 filing with the Securities and Exchange Commission.

The three-year-old agreement between the two companies is set to expire on Monday, April 30. Since the deal was announced on April 30, 2009, Ally has provided wholesale financing to the carmaker’s dealer network and retail financing to its U.S. and Canadian customers. The SEC filing, however, indicated that Chrysler hasn’t closed the door on teaming up with Ally going forward, reported F&I and Showroom magazine.

“We are currently pursuing various ways to optimize the financial products and services available to meet the needs of our dealers and customers in the U.S. and Canada,” Chrysler officials went on to say. “We have already begun discussing these alternatives with a number of financial institutions, including Ally.”

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Chrysler Talking to Banks About Auto-Lending Venture

DETROIT—Chrysler Group LLC is in discussions with banks about establishing an in-house lending arm through a joint-venture to better compete in the U.S. auto market, according to people familiar with the matter.

Chrysler, which gave up its struggling finance unit in its 2009 bankruptcy, has used government-owned Ally Financial Inc. as its preferred lender for customers loans and leasing, and for the loans that dealers use to finance vehicle purchases from the manufacturer, reported The Wall Street Journal.

With its contract with Ally scheduled to end in 2013, Chrysler is talking to several major lenders including Ally, and J.P. Morgan Chase & Co., to create a new lender. Banks have approached the auto maker in the past year as its fortunes rose.

The auto maker would take an ownership stake but not completely own the lending unit, said one of the people familiar with the matter. The banks would provide all financing. The deal would be similar to an agreement that Italy’s Fiat SpA, the majority owner of Chrysler, struck in 2006 with Credit Agricole SA to form Fiat Auto Financial Services.

A Chrysler spokeswoman declined to comment. JPMorgan and Ally also declined to comment.

The current arrangement with Ally hasn’t allowed Chrysler to pursue some potential loan customers other auto maker have enjoyed particularly in leasing, these people said.

“Chrysler likes the relationship they have with Ally, but they also want options,” said Chuck Eddy, who sells Chrysler, Dodge, Jeep, Ram and Fiat brand vehicles from his Youngstown, Ohio, dealership.

Mr. Eddy said he is satisfied with Ally as a lender; he sold 1,300 new cars last year and 90 percent were financed by Ally. “But competition is good, it keeps everyone honest and the rates where they need to be,” he added.

Ally also hasn’t provided so-called “floor plan” loans used to buy inventory to some weaker dealers.

Other major auto makers, including Ford Motor Co., General Motors Co. and Toyota Motor Corp., have in-house lending arms that industry executives say provide affordable financing to dealers and consumers and which can ensure credit availability in an economic downturn.

The inability of GM and Chrysler to offer loans to a wide-range of consumers amid the 2008 financial crisis contributed to those companies’ eventual bankruptcies.

In January, Chrysler leased only 9 percent of the vehicles it sold. That is compared with the 20 percent industry average. Leasing is important because it can lower the monthly payment of a company’s most expensive, and highest profit vehicles.

For instance, Chrysler, through the first nine months of 2011, leased 20 percent of Chrysler-brand vehicles, 6 percent of Dodges and 15 percent of Jeeps, according to Experian. The 20 percent leasing rate at Chrysler, which is considered the company’s premium brand, is well below GM and Ford’s premium brands. Around 47 percent of GM’s Cadillacs and 29 percent of its Buicks are leased. Ford Lincoln brand depends on leasing for 49 percent of sales.

Ally has the largest share of the U.S. auto lending market, but the lending arms of Honda Motor Co., Nissan Motor Co. and Toyota do more leasing, according to Experian.

The move toward establishing an in-house auto lender is a reversal for Chrysler CEO Sergio Marchionne, who had said previously such a move wasn’t necessary. In the more than two years since he took control of the Auburn Hills, Mich., company, rivals GM and Ford have benefited financially from having more control over auto lending.

As recently as last week, Mr. Marchionne said he didn’t feel that Chrysler was at a disadvantage in financing because of the lack of a finance arm.

In addition to aiding sales, a finance arm can be a valuable source of profit. GM started its own finance arm in 2010 after the purchase of subprime lender, AmeriCredit Corp. GM still has a lending agreement with Ally, which was established during its own 2009 bankruptcy. GM’s new finance unit made $281 million through the first nine months of 2011.

GM at first said it didn’t need a captive lending arm, but feared competition from rivals and the threat that loans could dry up in another downturn.

AmeriCredit helped GM get back into subprime lending, while Ally now provides most leases. GM this year is looking to expand its lending to dealers, which is still provided primarily by Ally.

Ally was originally GMAC Financial Services, and for 87 years was GM’s captive finance arm before it sold controlling interest to private-equity firms in 2006. GMAC switched its name after the auto maker severed its limited ownership stake during its bankruptcy. Ally was boosted by $17.2 billion in government loan support and still is struggling with losses from mortgage-lending.

Chrysler is nearing the end of a four-year contract that made Ally its primary auto lender. That agreement allows the auto maker to use its marketing money to help subsidize loans and leases through Ally. The auto maker needs to decide a year ahead of the contract end if it will extend the deal, one of those people said.

Chrysler’s deal with Ally came after the Obama Administration, which ushered Chrysler and General Motors in and out of bankruptcy, determined Chrysler Financial could survive only with a major cash infusion, which it refused to provide.

Chrysler Financial continued to operate as a third-party auto lender and insurance provider under the ownership of Cerberus Capital Management LP, the private-equity firm that bought Chrysler from DaimlerChrysler Corp. in 2007. The equity firm agreed to sell it to Toronto-Dominion Bank at the end of 2010.

Ally today is the largest financier of new car loans, according to industry researcher Experian Automotive.

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