Treasury to sell part of its stake in Ally Financial
The Treasury Department is selling $2.7 billion in trust-preferred securities that it holds in Ally Financial (GJM) to cut its stake in the former lending arm of General Motors (GM) that the government bailed out during the financial crisis. Proceeds from the sale will reimburse the Treasury for part of its $17.2 million investment in the auto and mortgage lender. The offering will not include the $5.9 billion in mandatory convertible preferred stock nor any common stock that the Treasury currently holds in the firm, which represent roughly 74% of the firm's total shares. Ally Financial earned $79 million during the fourth quarter as the lender continued to deal with issues related to foreclosure affidavits. The company said it has corrected roughly 90% of the roughly 25,000 foreclosure affidavits that employees had signed and filed improperly. Along with a multimillion-dollar settlement with Fannie Mae over representations and warranties, the lender began correcting affidavits signed en masse and without a proper review of the documentation as required by law in the 23 states that use a judicial process for foreclosures. In 2006, GMAC Financial Services became independent of General Motors and in 2008 Ally transformed into a bank holding company. Write to Kerri Panchuk.