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UPDATE 1-Ally Financial Q4 profit hurt by settlement charge

Feb 6 (Reuters) - Ally Financial Inc, the auto lender owned in part by the U.S. government, posted a lower quarterly profit, hurt by a $98 million charge related to a settlement with federal regulators.

The lender's core business of making auto loans to U.S. consumers slowed in the fourth quarter. New originations were $8.2 billion, down 8 percent from the same period in 2012 due to the expiration of an agreement to be the preferred lender of Chrysler.

The Detroit-based company, once the auto lending arm of General Motors Co, said net earnings fell to $104 million in the fourth quarter, from $1.44 billion a year earlier.

Last year's results got a boost from an $856 million tax benefit.

Ally had agreed to pay $98 million in December to settle allegations by regulators that it discriminated in auto lending against black, Hispanic and Asian/Pacific Islander borrowers.

Chief Executive Michael Carpenter said on a Thursday conference call with analysts that Ally is held to a higher regulatory standard than its rivals given its government ownership. The U.S. Treasury holds roughly 37 percent of Ally's shares.

The amount of money Ally set aside for bad loans also increased, to $140 million in the fourth quarter, up over 50 percent from the same period a year earlier. Executives said that older loans were entering their peak loss period and that provision expenses would increase 10 to 20 percent from current levels.