DETROIT (Bloomberg) -- Ally Financial Inc. won regulatory approval to change its holding-company status, allowing the firm to keep an insurance business and a vehicle-auction Web site.
The Federal Reserve granted Ally's request to convert to a financial holding company from a bank holding company, according to a statement from the Detroit-based lender today.
Ally, majority owned by the U.S. government, had said in a July filing that regulators might not allow the shift as an exemption ends this month, potentially imposing a "material adverse" effect on earnings.
CEO Michael Carpenter is working to retain an insurance unit and the SmartAuction Web site for dealers -- activities typically forbidden to bank holding companies -- as he overhauls the company. He has wound down mortgage operations that fueled losses and sold other assets as the lender looks to exit a $17.2 billion bailout by taxpayers.
"Crossing this threshold is a great achievement for Ally," Carpenter, 66, said in today's statement. "This has been a seminal year for the company, and we anticipate further momentum over the next year as we aim to exit the TARP program," he added, referring to the U.S. government's Troubled Asset Relief Program.
Ally reported more than $760 million in revenue from insurance premiums and other services through the first nine months. SmartAuction has sold more than 4 million vehicles since 2000, Ally said.
Ally, known as GMAC when it was the captive-finance arm of the automaker that's now called General Motors Co., won Fed approval to become a bank holding company on Dec. 24, 2008. The change enabled it to tap a U.S. rescue that swelled to $17.2 billion. Taxpayers still held a 64 percent stake in Ally as of Nov. 20, according to the company.
The firm was granted a two-year grace period for bringing operations into compliance with the Bank Holding Company Act, according to a July filing. After receiving three one-year extensions from the Fed, the company said it isn't permitted to request another.
"Certain of Ally's existing activities and investments are deemed impermissible under the BHC Act and must be terminated or disposed of by the expiration of this extension," the company said in the July filing.