Ally Financial Inc. paid back $4.5 billion in remaining debt owed to the Federal Deposit Insurance Corp. this week.
The debt was issued through the FDIC’s Temporary Liquidity Guarantee Program (TLGP) in the wake of the financial crisis when banking institutions were leaning heavily on government assistance. TLGP helped stabilize financial firms by guaranteeing newly issued senior unsecured debt and offering full coverage of non-interest bearing deposit transactions.
The debt issued to Ally in June 2009 had a maturity date of Dec. 19, 2012. At the time, Ally still was significantly exposed to mortgages, but has since moved away from the space, focusing mostly on auto lending. Ally eventually put its home lending unit Residential Capital into bankruptcy, so its mortgage servicing assets could eventually be auctioned off to other firms.
“Repayment of the remaining debt issued under the TLGP marks an important milestone for Ally as we continue our plans to exit the government support programs utilized during the financial crisis,” said Ally senior executive vice president of finance and corporate planning Jeffrey Brown. “Ally has made significant progress this year in reducing risks, gaining momentum in our core automotive services and direct banking franchises, and successfully executing strategic actions that will further strengthen the company going forward.”
