The Special Inspector General of the Troubled Asset Relief Program (TARP) released a report yesterday saying that the U.S. Treasury needs to develop a concrete plan for exiting its 74 percent stake in auto lender Ally Financial Inc., the second-largest remaining recipient of federal bailout dollars, Reuters reported yesterday. The agency, however, must exercise "great care and coordination" with the U.S. Federal Reserve in planning its exit to make sure Ally maintains a viable presence as a lender to the U.S. auto industry, the report said. Starting in 2008, the government pumped $17.2 billion into the Detroit-based lender, then known as GMAC, to keep financing available to the auto industry, which was receiving its own bailout. Unlike General Motors and Chrysler, however, the Treasury did not require GMAC to produce a plan for dealing with its liabilities, particularly toxic subprime mortgage loans that were piling up losses. In March 2011, Ally, the one-time in-house lending unit for GM, filed for an initial public stock offering that would have allowed the Treasury to sell some of its stock, but the plan was later shelved. In May, Ally's Residential Capital mortgage unit filed for bankruptcy, and the lender launched a plan to sell international operations to speed up taxpayer repayment. Ally still owes taxpayers $14.6 billion, according to the inspector general.
