Microsoft (MSFT) rises Thursday evening on Q4 earnings beat >>> READ MORE

U.S. Treasury Said to Want Ally Financial Sale, Not IPO

The financial institution has some tough challenges to deal with


The U.S. Treasury is looking to get payback for its $17.2 in bailout funds for Ally, which was once the banking operation of General Motors (NYSE:GM).

But according to a piece in Bloomberg, an IPO seem unlikely because of the high risks. The capital ratios remain low — based on the recent stress tests from the Federal Reserve — and the mortgage operation is likely to wind up in bankruptcy soon.

Instead, the Treasury is looking at two alternatives. One is to split up Ally into at least two operations, such as the auto finance segment and the online deposit organization. The other possibility is an outright sale.

But these actions are likely to take awhile. In the meantime, Ally needs to focus on getting things back on track, which will be far from easy. For one, Ally could lose its status as a preferred lender with Chrysler, which certainly would dampen the valuation for the auto unit.

— Tom Taulli, InvestorPlace





Article printed from InvestorPlace Media,

©2017 InvestorPlace Media, LLC