Ally Subpoenaed By DOJ
On the same day the U.S. Department of the Treasury sold the last of its remaining 54.9 million shares of Ally common stock, Ally Financial revealed that it has received a subpoena from the Department of Justice related to subprime auto lending.
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.
More Auto Finance
Subaru Enters Lending Business
The automaker follows other brands in adding captive financing in the U.S., and says the move will strengthen its position here.
Read More →
Positive Equity Reaches Record High
Mainstream vehicle owners who bought a car seven years ago are likely to have positive equity when trading in for a new vehicle, according to second-quarter Edmunds data.
Read More →
Dealerships Are Paying the Price for Extended Car Loans
Growing negative-equity scenarios mean such lengthy terms should be addressed in a forward-looking way to make them work for the dealer and the consumer down the road.
Read More →
Trade-Ins in Negative Equity Reach New Heights
As such trade-ins rise in frequency, so do monthly loan payment amounts and interest rates, according to second-quarter data compiled by Edmunds.
Read More →
Auto Credit Plentiful
June numbers show lenders are readily granting access, including to risky borrowers, as consumers leverage themselves to take on high prices.
Read More →
Automotive Consumers Sink Further in Debt
Most financing metrics hit records in the second quarter as more buyers locked themselves into long terms and high monthly payments.
Read More →
Porsche Financial Services Shifts Structure
After 36 years with Porsche, the Financial Services Chief Financial Officer Konrad Riedl is retiring, and the department is realigning its management structure.
Read More →
Tariffs Could Raise Insurance Premiums
As U.S. import tariffs affect repair costs, consumers might find it more affordable to replace a damaged vehicle, according to recent Insurify tariff analysis.
Read More →
Smaller Loans, Longer Terms
The youngest generation of car buyers is more likely to finance less expensive vehicles, more than half of generation Z consumers borrowing less than $25,000.
Read More →
New Cars a Tad More Affordable
May averages show that combined circumstances gave auto consumers slightly better buying power for the month, though average prices were up year-over-year.
Read More →