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Ally Subpoenaed By DOJ

December 19, 2014

DETROIT — On the same day it announced that it will exit the Troubled Asset Relief Program (TARP), Ally Financial also disclosed in a regulatory filing that it received a subpoena from the Department of Justice (DOJ) requesting information related to subprime auto lending.

Ally is the latest finance source to disclose that it is the subject of the DOJ's investigation into subprime lending. Other sources include Santander Consumer USA, GM Financial and Credit Acceptance Corporation. Also this month, Toyota Motor Credit Corp. and American Honda Finance Corp. revealed in regulatory filings that they also face enforcement actions from the DOJ and the Consumer Financial Protection Bureau. The captives said the two agencies allege that their auto lending practices — particularly policies that allow dealers to mark up consumer interest rates — resulted in discriminatory pricing of auto loans.

“… Ally recently received a subpoena from the DOJ requesting information in connection with its investigation related to subprime automotive finance and related securitization activities,” the filing read, in part. “Other financial institutions have disclosed receiving similar requests earlier this year.”

On the same day, Dec. 18, Ally announced that the U.S. Department of the Treasury has sold its remaining 54.9 million shares of Ally common stock at $23.25 per share, meaning the finance source will exit the TARP upon settlement of the sale. The U.S. Treasury received $19.6 billion in total on the $17.2 billion Ally investment, which is $2.4 billion more than originally invested. 

“This marks another major milestone in Ally's journey," said Ally CEO Michael A. Carpenter. “… Today, Ally stands as a stronger and more focused financial services company that is dedicated to continued progress in the future.”

Ally entered TARP in December 2008 as part of an effort to stabilize and strengthen the U.S. auto industry.  Since receiving the investment from the U.S. Treasury, Ally has financed 7.4 million U.S. vehicles purchases through its auto dealer network, which currently stands at approximately 16,000 dealers. This represents about one in every 12 new vehicles sold to U.S. consumers during that period. Additionally, Ally provided inventory financing for nearly 23 million vehicles purchased and more than 6,500 dealers since receiving the investment from the U.S. Treasury. 

A year ago, Ally reached a $98 million settlement with the DOJ and CFPB related to its auto lending practices, which the regulators said had resulted in discrimination against minority car buyers.

Comments

  1. 1. Sheldon Wolff [ December 20, 2014 @ 06:55AM ]

    Gettin a loan is a priveledge not a civil right. We all start out with no credit history, and if you're honest, responsible and forthright you also get rated that you're a good credit risk. there are so many dead beats, credit thives, and frauds that has destroyed our credit system. Everyone shares in the bad loans by driving up prices to make up for the losses. There are many greedy company that give loans to those who really should have one also. During the last 6 years or so many individuals good rating diminished because of the economy. The bigger the risk, the higher the interest rate. It's just business, the collection costs, the recovering costs, the losses, are all figured into the interest rate and rating.what I really don't agree with and the DOJ should look into is insurance companies , utilities , credit card companies , banks , that use credit scores to charge premiums. Insurance companies use the credit score to profile people and charge more than another with a poorer driving record but better credit. What really needs to be done in our educational system, is to institute classes in honesty, ethics, financial responsibility starting in middle high school. As the kids get a job, they need to save a portion for the future, we know there won't be any government retirement accounts, plus how to budget, and that their credit report will follow them like a criminal rap sheet. With better financial skills the USA will be far better off! At this point if you want to play ,, you're gonna have to pay!

  2. 2. Trevor [ December 22, 2014 @ 12:16PM ]

    The reality is that there is a discrepancy between financial literacy among both races and classes of American society. There is a correlation between financial literacy of customers and dealer participation which leads to an indirect correlation between race and dealer participation. The mistake the CFPB makes is to assume that this relationship is causal and not simply a correlation. Such a concept is absolutely ludicrous. Dealers and every other business try to make the most profit on every customer possible. Correlations between the profitability of racial groups lie solely in cultural differences and differences in financial literacy of the racial groups themselves. It is sad to see our tax dollars being diverted to interfere with free trade and hurt the American economy instead of being invested to increase the general financial illiteracy of our populace which is itself responsible for such discrepancies.

 

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