Ally Financial Inc., formerly known as GMAC Inc. (an acronym for General Motors Acceptance Corporation) until 2009, is a bank holding company headquartered in Detroit, Michigan. The company provides financial services including auto financing, corporate financing, insurance, mortgages, stock brokerage, and online banking. Ally is one of the top auto lenders in the U.S. by volume and is on the list of largest banks in the United States.
The company was founded in 1919 by General Motors Corporation as the General Motors Acceptance Corporation (GMAC) to be a provider of financing to automotive customers. Original offices were located in Detroit, New York City, Chicago, San Francisco, and Toronto. Over the following decades the business expanded to include insurance, online banking, mortgage operations, and commercial finance.
In 1985, GMAC formed GMAC Mortgage and acquired Colonial Mortgage as well as the servicing arm of Norwest Mortgage. In 1999, GMAC Mortgage purchased Ditech Funding In 2005, the company formed Residential Capital (ResCap) as a holding company for its mortgage operations.
In 2006, General Motors Corporation sold a 51% interest in GMAC to Cerberus Capital Management, a private equity firm. Also that year, GMAC divested a controlling interest of GMAC Commercial Holdings, its real estate division, and Capmark Financial Group to Goldman Sachs, KKR and Five Mile Capital Partners. In 2009, Capmark filed for bankruptcy and its North American loan origination and servicing business was acquired by Berkadia, a joint venture of Leucadia and Berkshire Hathaway.
On December 24, 2008, the Federal Reserve accepted the company's application to become a bank holding company. As a result of losses in the company's former ResCap subsidiary, the United States Treasury invested $17.2 billion in the company in 2008-2009. The Treasury sold its last stake in the company in 2014, recovering $19.6 billion from its $17.2 billion investment.
On May 15, 2009, GMAC's banking unit changed its name to Ally Bank. In May 2010, GMAC re-branded itself as Ally Financial. In 2012, the company sold its Canadian banking operations to Royal Bank of Canada. The company became a public company via an initial public offering in April 2014. In 2015, it moved its headquarters to One Detroit Center, Michigan.
In June 2016, Ally acquired TradeKing, an online brokerage, which was rebranded as Ally Invest.
Along with Wells Fargo, Bank of America, Capital One, and JP Morgan Chase, Ally is one of the top bank auto lenders in the U.S. by volume. The company offers financial services, such as retail auto financing and leasing, dealer lines of credit, insurance coverage, and vehicle auction services. Customers included over 18,000 automotive dealerships and 4.4 million retail consumers.
The company owns SmartAuction, a platform for live auto auctions via a website and mobile app. More than 5 million vehicles have been sold since it launched in 2000 and 364,000 vehicles were sold in 2016.
Ally Auto sponsors the South Florida Auto Show. and the Time Magazine Quality Dealer Award.
Ally Bank is a direct bank with $66.6 billion in retail customer deposits. Ally Bank offers savings products, including certificates of deposit (CDs), online savings accounts, interest checking accounts, money market accounts, mortgages, and credit cards.
Ally Invest is an online discount brokerage firm. Investors can buy and sell such securities as stocks, exchange-traded funds, mutual funds, bonds, options, futures contracts, and currency trading on the foreign exchange market via its electronic trading platform. It also provides margin lending and managed portfolios.
The company's corporate finance division provides capital to businesses in various industries.
In December 2013, the Consumer Financial Protection Bureau (CFPB) announced a settlement with Ally Financial to resolve alleged discrimination in its indirect auto lending program. According to the consent order, Ally charged African American borrowers an average of 29 basis points more than similarly situated White borrowers, Hispanic borrowers 20 basis points more than White borrowers, and Asian/Pacific Islanders 22 basis points more than White borrowers. The CFPB concluded that these disparities were statistically significant, based on race, and not based on creditworthiness or objective criteria related to borrower risk. The CFPB also alleged that the higher markups resulted from Ally’s specific policy and practice of allowing dealers to mark up a consumer’s interest rate above Ally’s established buy rate and then compensating dealers based on the markup. Under the terms of the consent order, Ally was required to establish a compliance committee, submit a compliance plan to the CFPB and United States Department of Justice for review, and pay $80 million in consumer monetary damages and $18 million in civil penalties.