Al de Molina was once the CEO of GMAC and Ally Bank, but his strategies left the bank in need of government bailouts.
New CEO Michael Carpenter has his work cut out for him in making Ally Bank capable of standing on its own two feet.
GMAC has received $13 billion in TARP funds and has asked for $6 billion more.
Ally has also received $7 billion in federally subsidized loans.
Ally bank has also been offering some very high cd rates and savings account rates. If you’re interested in CDs by the way, you should make sure to compare high interest CD rates from the top banks before committing to one. Most depositors don’t bother to check up on the health of their banks, they just want high rates. As a result GMAC’s deposits have gone up by over 50% up to $29 billion.
How do you think other banks feel about this government fueled bank getting all these CD and savings accounts? In the summer the American Bankers Association pressured the FDIC to cut down on Ally’s rates. The bank reduced its best CD rates, but not by much. Ally Bank still pays 2.1 times the national average for cd rates. For more information on banks visit Bromoney.
What has all this done for Ally’s financials? Very little. So why is the government still holding it up? So they can offer higher 6 month CD rates?
Carpenter certainly has his work cut out for him in restructuring the company. If GMAC isn’t able to survive without government bailouts, then it shouldn’t be allowed to survive at all.