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A special inspector general report on compensation for executives at General Motors and Ally Financial blasts the Treasury Department for allowing excessive pay at the companies as taxpayers lost billions of dollars on the auto bailouts. The watchdog group issuing the report monitors the Troubled Asset Relief Program (TARP), which was set up to save financial corporations deemed "too big to fail" due to systemic risk to America's financial system. The program was expanded to allow for the bailing out of the auto industry, despite the questionable use of funds specifically designated for financial institutions. A NY Times piece...

Report Criticizes Treasury for Allowing Pay Packages Worth at Least $1 Million a YearWASHINGTON—The Treasury Department allowed General Motors Co. GM +0.69% and Ally Financial Corp. ALLY +0.43% to give big pay raises to top executives while the firms struggled to exit their federal bailouts, a federal watchdog said Wednesday. The report criticized the Treasury for allowing Ally and GM to pay compensation packages worth at least $1 million in 2013 for all 25 top executives at each company. The companies paid those executives an average of $3 million annually, an increase of 28% from 2009, the report found. The...

Do you know Ally Financial Inc.? You've no doubt seen their commercials. They used to be all over the tube hawking their high-yielding certificates of deposit. Now they're all over the tube with their "no hidden fees" campaign. . . . But Ally isn't funny. It recently announced that it's launching an initial public offering (IPO) of its stock at a price per share of $25 to $28. The shares will be offered by the U.S. Treasury as part of its planned exit of its investment in Ally during the subprime crisis in 2008. I've heard some analysts say this...

The Federal Reserve's latest round of stress tests for the banking industry showed only one bank remaining on a shaky financial foundation . That bank was government-owned Ally Financial (the bailed-out company formerly known as GMAC), which also happens to be General Motors' prime source for financing. GM divested itself of GMAC so that the struggling lender could be classified as a bank holding company and receive billions of taxpayer dollars. In a move to distance itself from GM, the company was renamed Ally Financial. The government maintains majority ownership of Ally Financial, which in turn has helped GM by...

Yesterday's earnings' report by General Motors threw up some red flags that I reviewed here. In recent quarters, the media seemed to give quite a bit of coverage on GM's earnings, but not so this time. I wanted to follow up and discuss what the financial news networks obviously will not. The most glaring number that warrants further discussion was the $35 billion deferred tax valuation allowance. This tax credit is not allowed under GAAP (Generally Accepted Accounting Principles) but that does not stop many companies from using it as they tout non-GAAP earnings. It is the huge amount of...

A government watchdog says U.S. taxpayers stand to lose $27 billion from the 2008 financial bailout, up from an estimate of $22 billion made in the fall. A report issued Wednesday by the special inspector general for the Troubled Asset Relief Program says the estimate is higher because of increased losses for the Treasury Department on sales of shares in bailed-out companies. Ally Financial, the former financial arm for General Motors, still owes $14.6 billion of the $17.2 billion in aid it received. The report says taxpayers can expect to lose $5.5 billion on that investment because of the company's...

The final pieces are coming together in the General Motors' restructuring puzzle as the company has, not surprisingly, won its bid to repurchase government-owned Ally Financial's European and Latin American lending operations. GM was forced to spin off all but 10% of Ally Financial back when it was known as GMAC. Back in late 2008, the spigots of taxpayer money were open and GM had its cup out. In order for GM's lending arm (GMAC) to receive TARP funds, GM had to divest all but less than 10% of the company so that GMAC could be granted status as a...

The Obama Administration has become quite the expert on bankruptcy filings. The Detroit Free Press reports that the third auto bailout partaker, Ally Financial, has filed bankruptcy for its mortgage subsidiary, ResCap. The government still owns 74% of Ally, and now has an 0 for 3 record on restructuring bailed out auto-related companies outside of bankruptcy. Three years ago the Obama Administration, particularly the Auto Task Force, had a mission to restructure General Motors, Chrysler and GM's lending arm, GMAC. The stated goal was to restructure the auto industry players outside of bankruptcy. This stated goal turned out to be...

Last week's earnings report from General Motors revealed a troubling statistic for shareholders. GM's market share for North America shrunk from 18.3% a year ago to 16.7% for the latest quarter. Not coincidently, a survey by Yahoo Autos revealed that a full 13% of consumers would now "never" consider purchasing a GM vehicle while another 15% are less likely to purchase. A negative perception of the auto bailout process and the continued political overtones at GM are the reasons for the boycott. Another recent Rasmussen poll showed that 59% of Americans view the auto bailouts as a failure. The...

Ally Financial seldom gets mentioned when the auto bailouts are discussed. The company was formerly known as GMAC and the 17 billion dollars that taxpayers sunk into the company was crucial for the perceived success at both General Motors and Chrysler . We now learn that Ally Financial has failed a government stress test and, according to Reuters, "fared by far the worst of 19 banks examined." Years back, GMAC changed its name to Ally Financial to dissociate itself from GM. Just changing a name can not negate the fact that the $17,000,000,000 Ally Financial received from taxpayers went...

As reported yesterday, the cost of terminal abrogation of contractual rights in the US is, drumroll, $26 billion. Bloomberg notes: -$26 BILLION FORECLOSURE SETTLEMENT ANNOUNCED IN WASHINGTON -FORECLOSURE ACCORD RESOLVES 16-MONTH ROBO-SIGNING INVESTIGATION -FORECLOSURE ACCORD IS SUBJECT TO APPROVAL BY FEDERAL JUDGE -FORECLOSURE DEAL PRESERVES U.S., STATE RIGHTS TO OTHER CLAIMS -FORECLOSURE ACCORD COULD CLIMB TO $40 BLN IF 14 SERVICERS JOIN And a whole lot of corner offices for America's Attorneys General. As for what the market thinks of this "severe" settlement: BAC +1.2%, WFC +0.6%, JPM +0.4%, C -0.1%. For those who don't understand what just happened, US...

(Reuters) - Ally Financial Inc, the United States' largest maker of car loans, hopes that people have forgotten the time when "subprime" became a synonym for "disaster." Ally, once known as GMAC Financial Services, is getting ready to go public this year, and is making the case that subprime loans for used car buyers are not about to produce the same results that they did in the housing market a few years ago -- a near-collapse of the financial system. Auto loans performed relatively well during the downturn, and demand for cars is up, so auto lending is one of...

Now we got trouble.I am in receipt of a copy of a bulletin from Old Republic Title in which it states: The Company will not insure title to any property which has been foreclosed by Ally Financial, Ally Bank or GMAC until further notice. Oops.I suspect this is going to spread fast, given that this "wee problem" is NOT specific to GMAC and Ally.  In fact, JP Morgan/Chase has reported "similar discrepancies", and then today we had my report on a ruling from a court in which a counterfeit summons was issued not by the court, but by a...