UPDATE 1-U.S. Treasury in no rush to exit Ally Financial stake-source
Feb 8 (Reuters) - The U.S. Treasury, under pressure to wind down its crisis-era bailouts fast, believes it will take time to shed auto lender Ally Financial, because the company's mortgage lending unit is in a messy bankruptcy, a person familiar with the matter told Reuters.
Ally is one of Treasury's largest remaining holdings, but the lender will be hard to exit as long as it is working through the bankruptcy of its Residential Capital unit and is also selling its international operations, the person said.
"There are particular challenges with Ally," the person familiar with Treasury's thinking said. "There is no specific timetable," for a sale or stock offering, he added. Treasury understands the company's difficulties and supports the company's chief executive, Michael Carpenter, the source added.
The source did not want to be named because the person was not authorized to speak publicly on the matter.
Not everyone wants Treasury to be so accommodating. In a report last month, an internal Treasury watchdog said the agency needed a more concrete plan for getting repaid the $17.2 billion it poured into Ally during the crisis.
Treasury has been exiting other high-profile investments made through its crisis-era bailout fund, the Troubled Asset Relief Program. Since December, the agency has sold its remaining stock in insurer American International Group and announced plans to sell its last General Motors Co shares in the next year or so.
The government's difficulties in exiting Ally show how hard it will be for Treasury to completely close down TARP. Treasury has recovered 93 percent of the $418 billion it put to work in the program, but companies remaining could take a long time to shed.
Ally, the former GM lending arm, will be the largest remaining TARP recipient once the GM shares are sold. Treasury has said it plans to recoup its investment in the auto lender through a public or private sale of stock or by selling assets. An initial public offering "is one of the options that Treasury has down the road," the person said.
As of Feb. 15, the lender will have paid $5.9 billion to the government, including dividends. Treasury in 2011 sold off $2.7 billion in Ally securities, but it still owns $5.9 billion in preferred stock in the lender. The company hopes to repay those preferred shares soon.
Treasury also owns 74 percent of Ally's common equity. The auto lender filed for an IPO in March 2011 but shelved the offering amid turbulent financial markets and growing concern about ResCap's mortgage liabilities. In May 2012, ResCap, once a major subprime lender, filed for bankruptcy, and Ally announced a plan to sell international operations in a bid to speed up repayment.