The US government is selling the last of its shares in Ally Financial Inc., the former financing arm of General Motors, that was bailed out during the financial crisis.
The company said yesterday (December 18th) that the Treasury Department is selling its remaining 54.9 million shares, which amounts to about an 11 per cent stake in the company.
It is worth about $1.25 billion (£800 million), based on Ally's Thursday closing price of $22.75 on the New York Stock Exchange. The sale will end the government’s $85 billion bailout launched under George W. Bush and expanded by Barack Obama. The bailout is said to have saved hundreds of thousands of US auto jobs, but is reported to have costs up to $10 billion to the tax payers.
Ally received a $17.2 billion bailout that started in 2008. It's now a standalone auto financing company and bank. The US Treasury has already received $18.3 billion from its investment in Ally, the company said. The government sold the bulk of its stake when Ally went public last April.
Meanwhile, Ally Financial disclosed that it had received a Justice Department subpoena as part of an investigation into subprime auto loans. Federal prosecutors are looking at how lenders package and sell loans to investors. The Justice Department has also asked for information on the lender’s related securitisation activities, Ally said in a filing.
It comes as Ally last December agreed to pay $98 million to settle a Justice Department and Consumer Financial Protection Bureau probe into its lending practices.
The government had alleged a pattern of loan discrimination against minority borrowers, the Wall Street journal reports. The company didn’t admit wrongdoing under the settlement.
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