Ally Financial (GJM) CEO Michael Carpenter will not sign onto a settlement with the state attorneys general in the ongoing robo-signing case and is prepared for court if the final proposal does not fit the meager exposure he thinks the bank has. “We would not settle for the kind of numbers being bandied about,” Carpenter said. A recent version of a proposed settlement would charge the five largest servicers, which includes Ally, according to the Iowa AG office. Roughly $5 billion of the speculated $25 billion fine would go to payouts to borrowers directly affected by ongoing court costs and lost paperwork. The rest would help borrowers who are current on their mortgage but owe more than the home is worth with principal reduction and refinancing. “If we think a settlement is not in the best interest of our shareholders, which is still the U.S. taxpayer, then we will not participate,” Carpenter said in a conference call with investors Wednesday. “The downside is long-term aggravation and legal fees. But if you think we have significant exposure from a financial implication, the answer is no.” Carpenter said Ally reviewed 25,000 foreclosure cases with potential evidence of forged documents and affidavits. The bank found each borrower reviewed had been delinquent on the loan at least one year, in some cases two, he said. “We deeply regret the sloppy operational practices that led to this. But we have contractual obligations as a servicer to foreclose when we must,” Carpenter said. He said the bank has corrected the mistakes and reiterated on the call that each servicer may have different exposures in their portfolios. The CEO also lashed out at other government litigation, such as the recently announced lawsuits from the Federal Housing Finance Agency over allegedly faulty mortgage-backed securities sold to the government-sponsored enterprises during the housing boom. The FHFA sued Ally over $6 billion in certificates tied to MBS sold to Freddie Mac between September 2005 and May 2007. Carpenter called the lawsuit “tactical and completely without merit,” and said he was confident they would successfully defend the case. But his language was some of the strongest of any bank CEO regarding the robo-signing and FHFA cases. Whether or not Ally follows through and contends any settlement it disagrees with in court remains a question. “In any settlement you weigh the cost of fighting it out,” Carpenter said. Write to Jon Prior. Follow him on Twitter @JonAPrior.