Treasury recoups $2.7 billion in Ally sale

Associated Press

WASHINGTON

The Treasury Department said Wednesday it has sold trust-preferred securities the government held in Ally Financial for $2.7 billion, the latest step in its efforts to recoup the costs of the $700 billion financial bailout.

The department also hopes to get back more taxpayer money through an initial public offering of the former General Motors finance arm.

The government owns most of the company through its holdings of $5.9 billion of preferred stock and 74 percent of the company’s common stock.

Ally Financial received $17.2 billion in government support during the financial crisis. It has not paid back any of that support, although it has made $2.19 billion in dividend and interest payments.

The sale of the $2.7 billion in trust-preferred securities is scheduled to close Monday. A trust-preferred security is an investment that has characteristics of both a stock and a bond.

Ally CEO Michael A. Carpenter said the sale marked a key step in the company’s plan to repay U.S. taxpayers in full for the money it received from the government bailout fund, the Troubled Asset Relief Program.

Ally makes loans to GM customers and finances dealer inventories. The government first bailed out the company, then known as GMAC Inc., in late 2008 as part of the Bush administration’s aid to the auto industry.