US Treasury starts second trading plan for Ally Financial shares

Article by Andrew Christian, on September 15, 2014

The United States Treasury Department has commenced a second trading plan as part of its efforts to reduce its holdings in Ally Financial Inc. The Treasury used to hold a 16-percent stake in Ally in August, but the completion of the first trading plan has allowed it to trim the holdings to 13.8 percent, or 66.2 million shares of the company’s common stock.

Charmian Uy, Chief Investment Officer, remarked that the further sale of the common stock continues efforts to cut the investment in Ally and the Troubled Asset Relief Program (TARP). He remarked that the second trading plan will allow the Treasury to exit from Ally in a way that “balances speed of exit with maximizing the taxpayer’s return.”

In the first trading plan, the Treasury sold around 8.9 million shares, thereby recovering about $218.7 million for taxpayers. The Treasury has so far recovered about $18 billion on the Ally investment for taxpayers, which is around $873 million more than its original bailout investment at around $17.2 billion.

The Treasury bailed Ally out during the financial crisis through TARP, holding as much as 74 percent of the company. Since then, the Treasury has been reducing its stake in Ally. Ally chief executive Michael Carpenter remarked in February 2014 that the company may exit TARP by the end of the year.

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