Between October 2013 and June 2014, the Treasury Department reduced its ownership share in Ally Financial (formerly GMAC) from 74 percent to 16 percent, according to a report by the Government Accountability Office.
Ally received $17.2 billion in assistance under the Troubled Asset Relief Program (TARP) in December 2010, and as of June 30, the GAO says Treasury “had received $17.8 billion in sales proceeds and interest and dividend payments.” (RELATED: TARP Cost $24 Billion, Says CBO)
The government began reducing its investment in Ally in November 2013, after the Federal Reserve approved a capital plan that allowed Ally to go ahead with plans to repurchase $5.9 billion in preferred shares from the government. Under the capital plan, Ally also “issued $1.3 billion of common equity to third-party investors, reducing Treasury’s ownership share from 74 to 63 percent.”
Treasury accelerated its divestment in early 2014, selling $3 billion worth of common stock in January and an additional $2.4 billion through a public offering in April, which together brought its ownership share down to 16 percent.
The government’s initial decision to sell its shares on the open market, according to the report, was based on “information Treasury received about increasing investor interest.” Subsequently, “the positive results of the March 2014 Federal Reserve stress test… contributed to the decision to further reduce its ownership share.” (RELATED: TARP Has Run Its Course)
Apparently, Ally has not been adversely affected by the sales. Since 2013, the report claims, its “financial performance has continued to stabilize as illustrated by multiple capital, profitability, and liquidity measures.”
Treasury still holds about $1.8 billion of common stock in Ally, which it plans to divest “in a manner that balances the speed of recovery with maximizing returns for taxpayers.” Treasury officials told the GAO that no specific date has been set for selling its remaining shares, and that the timing of any such sale “will be based on market conditions.”
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