The Ally Financial board of directors has declared a quarterly dividend on outstanding preferred stock effective 15 November 2012. A payment of approximately $134 million, or $1.125 per share, will go to the U.S. Treasury, which has invested $17.2 billion in keeping Ally, formerly GMAC, in business as a bank holding company.
Treasury, courtesy of taxpayers, currently holds about 74% of Ally common equity, and $5.9 billion in mandatory convertible preferred securities, which have a dividend rate of 9%. Ally at the end of Q2 2012 had about $179 billion in assets, so it increasingly looks like taxpayers have a good chance at getting their money paid back.
However, Ally reported a net loss of -$898 million for the second quarter of 2012 because of the charges incurred by the bankruptcy of its home mortgage subsidiary ResCap, which was a full and eager participant in the housing bubble and the packaging of bundled mortgage bonds fraudulently rated as investment grade paper when they were junk. ResCap, chiefly the cause of Ally’s bankruptcy is now off Ally’s balance sheet, but a public stock offering – the way for Treasury to exit from this banking – doesn’t appear likely at this time given Ally’s history and recent results. (See GM Bids on Ally’s International Auto Lending Business)
Nonetheless, including the dividend on the Series F-2 Preferred Stock that Treasury holds, Ally will have paid a total of approximately $5.8 billion back to the U.S. taxpayers since February 2009. This amount includes preferred stock dividends, interest payments and proceeds received by the U.S. Treasury from its sale of Ally trust preferred securities. Treasury has actually made money on its Troubled Asset Relief Program or TARP started under President Bush, which successfully prevented the complete collapse of the global economy when the marketplace failed.
Ally also set a dividend payment of approximately $22 million, or $0.53 per share, on so-called Series A notes, which were originally held by GM and then sold to other investors during 2011, payable to shareholders of record as of 1 November 2012.
