Saturday, Dec 10, 2016
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Automotive

BUSINESS BRIEF

Financing firm reports deal to repay $5.2B

DETROIT — Auto financing and banking company Ally Financial Inc. took a big step toward exiting U.S. government ownership Tuesday, announcing a deal to pay taxpayers $5.2 billion for preferred stock granted in a 2009 bailout during the financial crisis.

Ally, the former financing arm of General Motors Co., had to be saved when the economy and auto industry nosedived, with the government spending $17.2 billion to save the firm and keep auto loans coming.

Under the deal, Ally also will pay the government accrued dividends plus $725 million for the Treasury Department’s right to acquire additional common stock shares. With the move, Ally will have repaid roughly $12 billion, meaning the government is still about $5.2 billion in the hole on the Ally deal.

In addition to the preferred stock, taxpayers also own 74 percent of Ally’s common stock.

There’s hope that taxpayers will get the rest of their money back when the stock is sold.

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