Swindlers and looters and their allies

Ally Bank is probably as well known for paying overmarket interest rates on CDs with no early withdrawal penalties as it is for its commercials featuring cute children who are cruelly deceived by a smarmy adult. The commercials are very good, here is one example.

“Even kids know it’s wrong to hold out on somebody. Why don’t banks?”

Good question. Here’s what Ally Bank is holding out on you in those commercials: Ally Bank used to be GMAC Bank. It is still owned by GMAC, an institution in which the Federal government owns a controlling interest – via the TARP bailout. GMAC has already received government bailout funds totaling over $12 billion and Federal loan guarantees for about $8 billion more.

At the end of October GMAC asked the Obama administration for another TARP bailout installment of $5.6 billion.

At Ally Bank’s website they do acknowledge their GMAC heritage: “We are Ally Bank, built on the foundation of GMAC Financial Services.”

The foundation of GMAC Financial Services?!? The ruins, maybe. If they’d said, “We are Ally Bank, rising Pheonix-like from the ashes of GMAC Financial Services through the beneficence, hard work and forebearance of US taxpayers,” I would give them credit for honesty. They do not make any such acknowledgment. I think all taxpayers’ names should be required by law to appear in the credits following any future Ally Bank commercials. This requirement would stop the commercials.

The Ally Bank website goes on to say:

We’re a bank that values integrity as much as deposits. A bank that will always be open, accountable, and honest. Yes, honest. We won’t deal in half-truths, kindatruths, or truths only buried in fine print. That’s because we don’t have anything to hide. We’re always going to give it to you straight.

Apparently, they forgot the last lines, “We need another $5 billion. Ignore that GMAC guy behind the curtain with his hand in your pocket.”

Ally Bank is willing and able to take on excessive risk because Uncle Sugar the Federal Government owns a controlling interest. Ally Bank is using your money to pay for the commercials and for high CD interest rates. But hey, the government-owner is regulating GMAC precisely, right down to the salaries of its employees. What could go wrong?

We have seen the benefits of this kind of “regulation” before. To recapitulate: Interest rates were held artificially low by the Federal Reserve, Fannie Mae and Freddie Mac were supported by Barney Frank in their complicity with the “collateralized securities” market, and ACORN intimidated private banks under the aegis of the Community Reinvestment Act – all of which resulted in the risky loans that created the real estate bubble. Now that GMAC is absolutely regulated via Federal ownership, they feel quite free to take on more risk than the market will bear. Why not? They’re using your money. They can behave like they’re Fannie or Freddie.

The American Bankers Association has an idea about problems that might arise:

“This aggressive deposit strategy is particularly egregious when it is used by a troubled bank in which the government holds a controlling interest,” said ABA president and CEO Edward Yingling in a May 27 letter to Federal Deposit Insurance Corp. chief Sheila Bair. “Such a bank is significantly shielded from investor and market influences that might otherwise act as a brake on risky financial strategies.”
[The FDIC, BTW, is getting close to asking for its own bailout. -DH]

“Even kids know it’s wrong to hold out on somebody. Why don’t banks?” What kind of bank runs deceptive ads on your dime and then runs to the Fed for several billion more taxpayer dollars? A government owned and run bank, that’s what kind of bank.

Shun Ally Bank. And complain to your Congressclunkers that as regulators they are incompetent corporatist cronies. They should shun bailouts. And re-election.