Ally Financial

Ally Financial Inc.
Public company
Traded as NYSE: ALLY
Industry Financial services
Founded 1919 (1919) (as GMAC Inc.)
Headquarters Detroit, Michigan (Corporate)
Midvale, Utah (Ally Bank)
Key people
 Franklin Hobbs, Chairman
Jeffrey J. Brown, CEO
William Muir, President[1]
Services Car finance
Vehicle service contracts
Online banking
Mortgages
Credit cards
Brokerage firm
Revenue Increase US$5.437 billion (2016)[1]
Increase US$1.111 billion (2016)[1]
Decrease US$1.067 billion (2016)[1]
Total assets Increase US$163.728 billion (2016)[1]
Total equity Decrease US$13.317 billion (2016)[1]
Owner Harris Associates (7.50%)
The Vanguard Group (7.50%)
JPMorgan Chase (4.00%)[2]
Number of employees
 7,600 (2016)[1]
Website www.ally.com

Ally Financial Inc., formerly known as GMAC Inc. (an acronym for General Motors Acceptance Corporation) until 2009, is a bank holding company headquartered in Detroit, Michigan. The company provides financial services including auto financing, corporate financing, insurance, mortgages, stock brokerage, and online banking. Ally is one of the top auto lenders in the U.S. by volume and is on the list of largest banks in the United States.

History

The company was founded in 1919 by General Motors Corporation as the General Motors Acceptance Corporation (GMAC) to be a provider of financing to automotive customers. Original offices were located in Detroit, New York, Chicago, San Francisco, and Toronto.[3] Over the following decades the business expanded to include insurance, online banking, mortgage operations, and commercial finance.

In 1985, GMAC formed GMAC Mortgage and acquired Colonial Mortgage as well as the servicing arm of Norwest Mortgage.[4] In 1999, GMAC Mortgage purchased Ditech Funding [5] In 2005, the company formed Residential Capital (ResCap) as a holding company for its mortgage operations.[6]

In 2006, General Motors Corporation sold a 51% interest in GMAC to Cerberus Capital Management, a private equity firm. Also that year, GMAC divested a controlling interest of GMAC Commercial Holdings, its real estate division, and Capmark Financial Group to Goldman Sachs, KKR and Five Mile Capital Partners.[7] In 2009, Capmark filed for bankruptcy and its North American loan origination and servicing business was acquired by Berkadia, a joint venture of Leucadia and Berkshire Hathaway.[8]

On December 24, 2008, the Federal Reserve accepted the company's application to become a bank holding company.[9] As a result of losses in the company's former ResCap subsidiary, the United States Treasury invested $17.2 billion in the company in 2008-2009. The Treasury sold its last stake in the company in 2014, recovering $19.6 billion from its $17.2 billion investment.[10]

On May 15, 2009, GMAC's banking unit changed its name to Ally Bank. In May 2010, GMAC re-branded itself as Ally Financial.[11] In 2012, the company sold its Canadian banking operations to Royal Bank of Canada.[12] The company became a public company in April 2014.[13] In 2015, it moved its headquarters to One Detroit Center, Michigan.[14]

In June 2016 Ally acquired TradeKing, an online brokerage, which was rebranded as Ally Invest.[15]

Current operations

Ally Auto

Along with Wells Fargo, Bank of America, Capital One, and JP Morgan Chase, Ally is one of the top bank auto lenders in the U.S. by volume.[16] The company offers financial services, such as retail auto financing and leasing, dealer lines of credit, insurance coverage, and vehicle auction services. Customers included over 18,000 automotive dealerships and 4.4 million retail consumers.[1]

The company owns SmartAuction, a platform for live auto auctions via a website and mobile app. More than 5 million vehicles have been sold since it launched in 2000[17] and 364,000 vehicles were sold in 2016.[1]

Ally Bank

Ally Bank is a direct bank with $66.6 billion in retail customer deposits.[1] Ally Bank offers savings products, including certificates of deposit (CDs), online savings accounts, interest checking accounts, money market accounts, mortgages, and credit cards. Ally Bank is a member of the Federal Deposit Insurance Corporation.[1]

Ally Corporate Finance

The company's corporate finance division provides capital to businesses in various industries.[1]

Ally Invest

In 2016, Ally acquired the online brokerage platform TradeKing. In 2017, it was re-branded and launched as Ally Invest, an online discount brokerage firm. Investors can buy and sell such securities as stocks, bonds, options, mutual funds, and exchange-traded funds and trade on the foreign exchange market via its electronic trading platform.

2013 discrimination settlement

In December 2013, the Consumer Financial Protection Bureau (CFPB) announced a settlement with Ally Financial to resolve alleged discrimination in its indirect auto lending program. According to the consent order, Ally charged African American borrowers an average of 29 basis points more than similarly situated White borrowers, Hispanic borrowers 20 basis points more than White borrowers, and Asian/Pacific Islanders 22 basis points more than White borrowers. The CFPB concluded that these disparities were statistically significant, based on race, and not based on creditworthiness or objective criteria related to borrower risk. The CFPB also alleged that the higher markups resulted from Ally’s specific policy and practice of allowing dealers to mark up a consumer’s interest rate above Ally’s established buy rate and then compensating dealers based on the markup. Under the terms of the consent order, Ally was required to establish a compliance committee, submit a compliance plan to the CFPB and United States Department of Justice for review, and pay $80 million in consumer monetary damages and $18 million in civil penalties.[18]

Sponsorships

Ally sponsors the Miami Auto Show.[19]

Ally sponsors the Time Magazine Quality Dealer Award through 2021.[20]

See also

References

  1. 1 2 3 4 5 6 7 8 9 10 11 12 Ally Financial 2016 Form 10-K Annual Report
  2. ↑ Ally Financial Ownership Summary
  3. ↑ Ally: Our History
  4. ↑ Gruber, William (March 14, 1985). "Gmac Buying Mortgage Portfolio". Chicago Tribune.
  5. ↑ Strickland, Daryl (March 23, 1999). "DiTech Funding to Be Bought by GMAC Mortgage". Los Angeles Times.
  6. ↑ Warren, Elizabeth (March 10, 2010). "Unique Treatment of General Motors Acceptance Corp. (GMAC) Under the TARP". Congressional Oversight Panel.
  7. ↑ "Investor Group Completes Acquisition of Majority Stake in GMAC Commercial Holding Corp." (Press release). PRNewswire. March 23, 2006.
  8. ↑ "Berkadia Commercial Mortgage LLC Completes Acquisition of Capmark’s North American Loan Origination and Servicing Business" (Press release). Business Wire. December 11, 2009.
  9. ↑ Dash, Eric; Bajaj, Vikas (December 24, 2008). "Fed Approves GMAC Request to Become a Bank". New York Times.
  10. ↑ "U.S. Treasury Sells Ally Financial Stake; No More Government Motors". Forbes Magazine. December 31, 2014.
  11. ↑ Campbell, Dakin (May 3, 2010). "GMAC Posts Profit, Will Change Name to Ally Financial". Bloomberg L.P. Retrieved 2013-07-27.
  12. ↑ "Royal Bank buys online savings bank Ally for $3.8B". CBC News. October 23, 2012.
  13. ↑ "Ally Financial Announces Pricing of Initial Public Offering" (Press release). PRNewswire. April 9, 2014.
  14. ↑ Blumenthal, Jeff (March 31, 2015). "Ally Financial moving to One Detroit Center". The Detroit News. Retrieved March 31, 2015.
  15. ↑ "http://www.bizjournals.com/charlotte/news/2017/05/12/tradeking-transformation-complete-after.html". www.bizjournals.com. Retrieved 2017-06-24. External link in |title= (help)
  16. ↑ William Hoffman (March 3, 2017). "Chase Ties Ally as Top Bank Auto Lender". Auto Finance News.
  17. ↑ "5 millionth car sold on SmartAuction". Auto Remarketing. October 7, 2015.
  18. ↑ "CFPB and DOJ Order Ally to Pay $80 Million to Consumers Harmed by Discriminatory Auto Loan Pricing". Consumer Financial Protection Bureau. December 20, 2013.
  19. ↑ HANNAH, SAMPSON (October 14, 2014). "Ally Financial new sponsor for Miami International Auto Show". Miami Herald.
  20. ↑ "Ally Renews Exclusive Sponsorship of TIME Dealer of the Year Through 2021" (Press release). Ally. July 22, 2015.
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