Ally Financial: People’s Ally in the Financial World

Previously known as General Motors Acceptance Corporation (GMAC Inc.), Ally Financial Inc. is an American bank holding company with a headquarters in Detroit, Michigan. It has over 15 million customers worldwide and offers a range of financial services such as financing, insurance, online banking, and mortgage services. During the financial crisis of 2007-08, the company was bailed out by the US government, taking over from General Motors. On December 24, 2008, the Federal Reserve accepted the company’s (then GMAC) application to become a bank holding company. In 2010, as Ally Financial, it returned to profitability, garnering a net profit of $1.075 billion for the said fiscal year. Ally planned to make the company public but did not execute an initial public stock offering in 2011.

Ally was founded in 1919 as General Motors Acceptance Corporation by General Motors Corporation. Originally, it was established to provide financing services to automotive customers. Over the next years, the business expanded to offer insurance, mortgage, online banking, and commercial finance. In its founding year, GMAC opened offices in Detroit, Chicago, New York, San Francisco, and Toronto.

In 1985, GMAC launched GMAC Mortgage after it purchased Colonial Mortgage Service’s mortgage loan operations and Norwest Mortgage’s servicing arm. In the following years, the division acquired additional mortgage-related operations such as ditech.com. The division was reorganized in 2005, forming Residential Capital (ResCap). At the time, the company was heavily focused on subprime lending.

In 2000, GMAC acquired conditional approval to form the GMAC Bank. The year after, General Motors Corporation sold a 51% interest in GMAC to Cerberus Capital Management, a private equity company. In 2006, GMAC divested a majority stake of GMAC Commercial Holdings to KKR, Goldman Sachs, and Five Mile Capital Partners.

On December 29, 2008, GMAC received a $5 billion investment from the United States Department of the Treasury from its Troubled Asset Relief Program (TARP).