US Treasury Pushing for Split of Ally? (GM)

Ally’s management is resisting the idea, and the government is not pressing too hard, according to Bloomberg News, for fear of being viewed as a “heavy-handed owner.” And Treasury officials aren’t the only ones suggesting a split. Bloomberg cites a letter from investor Elliot Management Corp. also recommending that Ally be split up.

Some have suggested that GM purchase Ally’s auto finance business, but that is unlikely to happen until the bank dumps its Residential Capital mortgage unit and strengthens its capital position.

Since 2009 Ally has financed 6.7 million GM and Chrysler purchases for dealers and about 2.4 million for customers. Ally has repaid $5.4 billion of its debt to US taxpayers.

Paul Ausick