TROUBLED ASSET 

RELIEF PROGRAM

Status of Treasury’s 

Investments in 

General Motors and 

Ally Financial

Report to Congressional Committees

October 2013

GAO-14-6

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-14-6, a report to 

congressional committees

October 2013

TROUBLED ASSET RELIEF PROGRAM

Status of Treasury’s Investments in General Motors

and Ally Financial 

Why GAO Did This Study

As part of its Auto Industry Financing 

Program (AIFP), funded through the 

Troubled Asset Relief Program 

(TARP), Treasury committed $67.3 

billion to automaker GM and to Ally 

Financial, a large bank holding 

company whose primary business is 

auto lending. TARP’s authorizing 

legislation mandates that GAO report 

every 60 days on TARP activities. 

This report examines (1) the current 

financial condition of the two 

companies and (2) the status of 

Treasury’s investments in the 

companies and its plans to sell those

investments. 

To examine the financial condition of 

GM and Ally Financial, GAO reviewed

industry, financial, and regulatory data

for the time period from the beginning 

of 2008 through the second quarter of 

2013. GAO also reviewed Treasury 

reports and documentation detailing 

Treasury’s investments in GM and Ally

Financial and its proposed strategies 

for divesting itself of the investments, 

as well as both companies’ financial 

filings and reports. In addition, GAO 

interviewed officials from Treasury, the

Board of Governors of the Federal 

Reserve (Federal Reserve), GM, Ally

Financial, and financial analysts who 

study GM and Ally Financial. 

In its written comments on a draft of 

this report, Treasury describes the auto 

industry’s recovery and the progress 

Treasury has made in unwinding its 

investments in GM and Ally Financial. 

Treasury, the Federal Reserve, GM, 

and Ally Financial also provided 

technical clarifications, which were 

incorporated, as appropriate.

What GAO Found

Since receiving federal assistance, General Motors Company (GM) has shown 

increasingly positive financial results. For each of the past 3 years, GM has 

reported profits, positive and growing operational cash flow, and a stable liquidity 

position. This improved financial performance has been reflected in GM’s credit 

rating, as each of the three largest credit rating agencies has increased GM’s 

long-term credit rating. However, GM faces continued challenges to its 

competitiveness. For instance, its market share of vehicles sold in North 

America remains smaller today than in 2008. Furthermore, GM continues to 

carry large pension liabilities.

With Treasury’s investments in Ally Financial, the company’s condition has 

stabilized. For example, Ally Financial’s capital and liquidity positions have 

stabilized or improved over the last 4 years. Such improvements have been 

noted by the three largest credit rating agencies, each of which has upgraded 

Ally Financial’s credit rating. However, Ally Financial’s credit rating remains 

below investment grade and its mortgage unit—Residential Capital LLC—

impacted the company’s financial performance. The mortgage unit filed for 

bankruptcy in May 2012, and these proceedings are ongoing. Analysts with 

whom GAO spoke indicated that the resolution of its mortgage unit’s bankruptcy 

will be a positive development for Ally Financial’s future financial performance.

Status of Automotive Industry Financing Program, as of September 18, 2013 (in billions)

Note: Numbers may not sum because of rounding. 

As of September 18, 2013, the Department of the Treasury (Treasury) has 

recovered about $35.21 billion of its $51 billion investment in GM and reduced its 

ownership stake from 60.8 percent to 7.32 percent. By early 2014, Treasury 

plans to fully divest its GM common shares through installments and estimates 

that it will lose at least 19 percent of its original investment. Treasury is working 

to exit from Ally Financial with a recent agreement to sell all of its preferred stock 

to the company for approximately $6 billion, but Treasury faces challenges. As a 

regulated bank holding company, Ally Financial must be well capitalized to 

receive its regulator’s approval to repurchase shares from Treasury. Earlier this 

spring, Ally Financial’s tier 1 common ratio fell below the required 5 percent in the 

Federal Reserve’s “stress test,” and the Federal Reserve objected to the 

company’s capital plan. Ally Financial also faces growing competition in the 

consumer lending and dealer financing sectors that could impact its financial 

performance in the future. The extent of Treasury’s recoupment on its Ally 

Financial investment will depend on the ongoing financial health of the company.

View GAO-14-6. For more information, contact 

A. Nicole Clowers at (202) 512-8678 or 

clowersa@gao.gov.
Page i GAO-14-6 Troubled Asset Relief Program

Letter 1

Background 3

Financial Condition of GM and Ally Financial 9

Treasury Is Working to Exit from Its Remaining Investments in GM 

and Ally Financial 22

Agency and Third Party Comments 31

Appendix I Objectives, Scope, and Methodology 35

Appendix II Comments from the Department of the Treasury 38

Appendix III GAO Contact and Staff Acknowledgments 40

Tables

Table 1: GM’s Net Income, Operating Income and Cash Flow (in 

billions), 2008-2012 10

Table 2: Ally Financial Capital Ratios, 2009-2012 16

Table 3: Selected Financial Performance Metrics for Ally Financial, 

2009-2012 18

Figures

Figure 1: GM’s North American Market Share, 2008-2013 12

Figure 2: Trends in GM’s U.S. Pension Plans’ Liabilities and Assets 14

Figure 3: Ally Financial Net Income (Loss) by Operating Unit, 2009-

2012 17

Figure 4: Ally Financial Liquidity Ratio, June 2009-June 2013 19

Figure 5: Ally Financial Operating Cash Flow, January 2009-June 

2013 20

Figure 6: Breakeven Price for GM Shares Needed for Treasury to 

Fully Recoup Its Investment 24

Figure 7: Dollar Amount of Consumer Auto Loans for Five Large 

Bank Holding Companies, 2011-2013 30

Contents
Page ii GAO-14-6 Troubled Asset Relief Program

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately.
Page 1 GAO-14-6 Troubled Asset Relief Program

441 G St. N.W.

Washington, DC 20548

October 29, 2013

Congressional Committees:

In 2008 and 2009, the Department of the Treasury (Treasury) provided 

significant support to the automotive industry—including both auto 

manufacturers and automotive finance companies—after deteriorating 

economic conditions resulted in a dramatic decline in auto sales and 

significant financial losses in the industry. In particular, through the 

Automotive Industry Financing Program (AIFP) under the Troubled Asset 

Relief Program (TARP), Treasury committed approximately $51 billion to 

help General Motors Company (GM).1 Through AIFP, Treasury also 

provided about $16.3 billion to GMAC, a financial services company 

whose businesses included providing consumer financing for vehicle 

purchases and dealer financing for inventory. In 2010, GMAC LLC 

became Ally Financial, Inc. (Ally Financial).2 While Treasury has 

recouped much of its investments in these companies—most notably, 

through GM’s initial public offering (IPO) in November 2010—more than 

$29.57 billion of Treasury’s assistance to GM and Ally Financial remained 

outstanding as of September 18, 2013.3

This report is based on our continuing analysis and monitoring of 

Treasury’s activities in implementing the Emergency Economic 

Stabilization Act of 2008 (EESA), which provided GAO with broad 

oversight authorities for actions taken under TARP.4

 1

Emergency Economic Stabilization Act of 2008, Pub. L. No. 110-343, § 101, 122 Stat. 

3765, 3767 (codified at 12 U.S.C. § 5211). This report focuses on GM and Ally Financial 

and does not examine the assistance provided to other auto manufacturers or auto 

financing companies through AIFP, including Chrysler Holdings.

This report examines 

(1) the financial condition of GM and Ally Financial and (2) the status of 

Treasury’s investments in the companies and its plans to wind down 

those investments.

2

GMAC renamed itself Ally Financial, Inc., in 2009 and expanded its depository banking 

operation under the name of Ally Bank. For this report, we use GMAC to refer to the 

company for activities and events that predate the name change.

3

The amount outstanding does not include write-offs and realized losses that Treasury 

has absorbed and dividends, interest, and other income that Treasury has realized on its 

investments. 

4

Pub. L. No. 110 -343, § 116, 122 Stat. 3765 3783 (codified at 12 U.S.C. § 5226).
Page 2 GAO-14-6 Troubled Asset Relief Program

To examine the financial condition of GM and Ally Financial, we reviewed 

financial and industry data for 2008 and 2009, respectively, through June 

2013 for both companies. To assess GM’s financial condition, we 

reviewed its net income, operating income, operating cash flow, credit 

ratings, sales of automobiles, share of the North American market, and 

pension obligations and pension plan funding for its U.S. employees. For 

Ally Financial, we reviewed capital ratios, net income, net interest spread, 

return on assets, nonperforming asset ratio, liquidity ratio, bank deposits, 

operating cash flow, and credit ratings. To describe the status of 

Treasury’s investment in GM and Ally Financial, we reviewed Treasury’s 

Section 105(a) Reports to Congress detailing the levels of the 

investments made in GM and Ally Financial, including the number of 

shares owned by Treasury and Treasury’s daily transactions reports.5

To analyze Treasury’s plan to wind down its investments, we reviewed 

Treasury documentation relating to its exit from GM and Ally Financial. In 

addition, we reviewed the Board of Governors of the Federal Reserve 

System’s (Federal Reserve) publicly available reports relating to its 2013 

stress tests on bank holding companies with assets of $50 billion or more 

and the Comprehensive Capital Analysis and Review 2013.

We 

also interviewed Treasury officials.

6

 5

Under EESA, every 30 days, Treasury must submit to Congress reports on actions taken 

and funds obligated and spent during the reporting period as well as detailed financial 

statements covering, among other items, agreements made, assets purchased, 

transactions that occurred, and the valuation or pricing method used for each transaction.

§ 105(a), 122 Stat. at 3771-72.

We also 

interviewed officials from Treasury, Federal Reserve, Federal Deposit 

Insurance Corporation (FDIC), GM, and Ally Financial. We assessed the 

completeness and accuracy of all data used in this report and determined 

they were sufficiently reliable for the purposes of this report. For each

data source we reviewed the data for completeness and obvious errors, 

such as outliers, and determined that these data were sufficiently reliable 

for our purposes. We reviewed past GAO data reliability assessments to 

6

Stress testing is one tool that helps bank supervisors measure whether a bank holding 

company has enough capital to support its operations throughout periods of stress. The 

Dodd-Frank Wall Street Reform and Consumer Protection Act requires the Federal 

Reserve to perform an annual stress test of bank holding companies with $50 billion or 

more in total consolidated assets. Pub. L. No. 111-203, § 165(i)(1)(A), 124 Stat. 1376, 

1430 (2010)(codified at 12 U.S.C. § 5365(i)(1)(A)). The Comprehensive Capital Analysis 

and Review is an annual assessment by the Federal Reserve of the internal capital 

planning process and capital adequacy of large, complex U.S. bank holding companies.

12 C.F.R. §225.8. 
Page 3 GAO-14-6 Troubled Asset Relief Program

ensure that we, in all material respects, used the data in a similar manner 

and for similar purposes. For a more detailed discussion of the scope and 

methodology, please see appendix I.

We conducted this performance audit from March 2013 to October 2013 

in accordance with generally accepted government auditing standards.

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings based 

on our audit objectives.

The decision to provide substantial amounts of funding to the auto 

industry—more than 12 percent of all authorized TARP funds—and to 

accept equity in the companies in return for some of the assistance 

reflects Treasury’s view of the automotive industry’s importance to the 

U.S. economy. According to Treasury officials, Treasury provided 

assistance not simply because of the industry’s importance, but because 

of the severity of the crisis and the desire to prevent significant disruption 

to the economy that would have resulted from uncontrolled liquidations of 

Chrysler and GM. To help stabilize the industry and avoid economic 

disruptions, Treasury disbursed $79.7 billion through AIFP from 

December 2008 through June 2009. The majority of the assistance was 

used to support two automakers, Chrysler and GM, during restructuring, 

along with their automotive finance companies, Chrysler Financial and 

GMAC.7

• exiting its investments as soon as practicable in a timely and orderly 

manner that minimizes financial market and economic impact;

In July 2009, Treasury outlined guiding principles for the 

investments made to the auto industry, including:

• protecting taxpayer investment and maximizing overall investment 

returns within competing constraints;

 7

Treasury disbursed a total of $12.4 billion to Chrysler-related entities including Old 

Chrysler and New Chrysler. Of the $12.4 billion that was disbursed to Chrysler-related 

entities under TARP, Treasury collected more than $11.1 billion through principal 

repayments, sale of investments, and interest. While Treasury retains a right to receive 

proceeds from a liquidation trust related to Old Chrysler, no significant future cash flows 

are expected. Treasury completed its exit from New Chrysler in July 2011.

Background
Page 4 GAO-14-6 Troubled Asset Relief Program

• improving the strength and viability of GM and Chrysler so that they 

can contribute to economic growth and jobs without government 

involvement; and

• managing its ownership stake in a hands-off, commercial manner, 

including voting its shares only on core governance issues, such as 

the selection of a company’s board of directors and major corporation 

events or transactions.8

GM is one of the world’s largest automotive companies and does 

business in more than 120 countries worldwide. As of December 31, 

2012, it employed 213,000 workers worldwide and marketed vehicles 

through a network of independent retailers totaling 20,754 dealers. In 

North America, GM manufactures and markets the following brands: 

Buick, Cadillac, Chevrolet, and GMC.

Treasury provided a $13.4 billion loan in December 2008 to the Old GM 

to fund working capital.9

 8

Treasury established two other programs under AIFP—the Auto Supplier Support 

Program and the Auto Warranty Commitment Program. The Auto Supplier Support 

Program was designed to ensure that automakers received the parts and components 

they needed to manufacture vehicles and that suppliers had access to liquidity on their 

receivables. Under this program, GM and Chrysler received loans, all of which have been 

repaid. The Auto Warranty Commitment Program was designed to mitigate consumer 

uncertainty about purchasing vehicles from the restructuring automakers by providing 

funding to guarantee the warranties on new vehicles from those automakers. Funds were 

provided to GM and Chrysler under this program, but both companies were able to 

continue to honor consumer warranties and the funds have been repaid in full.

Treasury also lent $884 million to the Old GM for 

the purchase of additional ownership interests in a rights offering by 

GMAC. In April 2009, Treasury loaned an additional $6 billion to fund Old

GM as it worked to submit a viable restructuring plan (working capital 

loan). These funds, along with loans from the Canadian government and 

concessions from nearly every stakeholder, including the company’s 

primary labor union—the International Union, United Automobile, 

Aerospace and Agricultural Implement Workers of America (UAW)—were 

intended to give the companies time to restructure to improve their 

competitiveness and long-term viability.

9

General Motors Company is a new legal entity that was created through the bankruptcy 

process to purchase substantially all of the operating assets of the former firm.

Throughout this report, we refer to the prereorganization company as “Old GM” and the 

postreorganization company as “GM.” 

Assistance to GM
Page 5 GAO-14-6 Troubled Asset Relief Program

As a condition of receiving this assistance, Old GM was required to 

submit a plan to Treasury that would, among other things, identify how it 

intended to achieve and sustain long-term financial viability. GM’s initial 

viability plan submitted in February 2009 was rejected. The plan 

established targets for addressing some of the company’s key challenges 

to achieving viability, including reducing debt, numbers of brands and 

models, dealership networks, and production costs and capacity. In 2009, 

Old GM filed a voluntary petition for reorganization under Chapter 11 of 

the U.S. bankruptcy code. Subsequently, in June 2009, Treasury 

provided Old GM with $30.1 billion under a debtor-in-possession 

financing agreement to assist during the restructuring.10 The newly 

organized GM was able to purchase most of the operating assets of the 

former company through a sale under Section 363 of the bankruptcy 

code.11 When the sale was completed on July 10, 2009, Treasury 

converted most of its loans into 60.8 percent of the common equity in GM 

and $2.1 billion in preferred stock.12 In addition, $6.7 billion of the TARP 

loans remained outstanding after the bankruptcy. In spring 2011, the

bankruptcy was completed, and Old GM’s remaining assets and liabilities 

were transferred to liquidating trusts. As we concluded in our past work, 

the federal assistance allowed GM to restructure its balance sheets and 

obligations through the bankruptcy code and tackle key challenges to 

achieving viability.13

Ally Financial, previously known as GMAC, formerly served as GM’s 

captive auto finance company.14

 10A debtor-in-possession financing agreement is financing arranged by a company while 

under a Chapter 11 bankruptcy reorganization.

The primary purpose of auto financing is 

to provide credit to consumers so that they can purchase automobiles. In 

1111 U.S.C. § 363 (2010).

12Preferred stock is equity ownership that usually pays a fixed dividend and gives the 

holder a claim on corporate earnings that is superior to the claims of common stock 

owners. Preferred stock also has priority in the distribution of assets when a bankrupt 

company is liquidated.

13GAO, TARP: Treasury’s Exit from GM and Chrysler Highlights Competing Goals, and 

Results of Support to Auto Communities Are Unclear, GAO-11-471 (Washington, D.C.:

May 10, 2011). 

14A captive auto lender’s primary business is to finance the purchase of a specific 

manufacturer’s automobiles.

Assistance to Ally 

Financial
Page 6 GAO-14-6 Troubled Asset Relief Program

determining how to finance their purchases, consumers have many 

financial institutions from which to choose, including banks, credit unions, 

and auto finance companies, all of which may offer loans or other credit 

accommodations for the purchase of new and used automobiles. In 

addition to consumer financing, auto dealers have also traditionally used 

manufacturers’ finance companies to finance their purchase of the 

automobile inventory that they sell (known as floor-plan financing).15

Prior to the financial crisis, GMAC’s subsidiaries expanded into other 

areas of financial services, such as auto insurance and residential 

mortgages, but GMAC remained a wholly owned subsidiary of the Old 

GM. In 2006, Cerberus Capital Management purchased 51 percent of the 

company. GM retained a 49 percent ownership stake. As the housing 

market declined in the late 2000s, the previously profitable GMAC 

mortgage business unit began producing significant losses. For example, 

the company’s Residential Capital LLC (ResCap) subsidiary—which by 

2006 had grown to be the country’s sixth-largest mortgage originator and 

fifth-largest mortgage servicer—lost approximately $17 billion from 2007 

through 2009. During the same time period, automobile sales in the U.S. 

dropped from 16.4 million to 10.4 million, negatively affecting the 

company’s core auto financing business.

According to Treasury, Treasury determined that without government 

assistance GMAC would be forced to deny or suspend financing to 

creditworthy dealerships, leaving them unable to purchase automobile 

inventory for their lots.16

 15Floor-plan, or wholesale, lending is a form of retail goods inventory financing in which 

each loan advance is made against a specific piece of collateral. As each piece of 

collateral is sold by the dealer, the loan advance against that piece of collateral is repaid.

Items commonly subject to floor-plan debt are automobiles, large home appliances, 

furniture, television and stereo equipment, boats, mobile homes, and other types of 

merchandise usually sold under a sales finance contract.

Without orders for automobiles from dealerships, 

GM would have been forced to slow or shut down its factories indefinitely 

to match the drop in demand. Given its significant overhead, a slow-down 

or stoppage of this magnitude would have caused GM to topple, 

according to Treasury.

16 Before the financial crisis, Chrysler had owned a finance company, Chrysler Financial.

Chrysler Financial ceased operating and its business taken on by GMAC.
Page 7 GAO-14-6 Troubled Asset Relief Program

However, GMAC was not initially eligible for assistance under the TARP 

Capital Purchase Program (CPP).17 To become eligible for federal 

financial assistance, GMAC sought to convert GMAC Bank’s charter from 

an industrial loan company into a commercial bank in 2008 and applied to 

the Federal Reserve for bank holding company status.18

Treasury subsequently provided GMAC with additional assistance 

through TARP.

GMAC also 

submitted an application to participate in the Capital Purchase Program, 

conditional upon becoming a bank holding company. The Federal 

Reserve approved GMAC’s bank holding company application in 

December 2008. Although GMAC originally applied for participation in 

CPP, in late December 2008, as a part of AIFP, Treasury agreed to 

purchase $5 billion in senior preferred equity from GMAC and received an 

additional $250 million in preferred shares through warrants that Treasury 

exercised immediately.

• In May 2009, Treasury purchased $7.5 billion of mandatory 

convertible preferred shares from GMAC.19

• In December 2009, Treasury purchased additional shares—$2.5 

billion of trust preferred securities and approximately $1.3 billion of 

mandatory convertible preferred shares.20

 17As a commercial company, GMAC was not originally eligible for TARP assistance 

through the Capital Purchase Program. However, in December 2008, Treasury 

established AIFP to provide assistance to the U.S. automotive industry to help avoid 

disruptions that would pose systemic risk to the nation’s economy; Treasury subsequently 

provided assistance to GMAC through AIFP.

Also, in December 2009, 

Treasury converted $3 billion of existing mandatory convertible 

18A bank holding company is a company that owns, or has controlling interest in 25 

percent or more of the ownership in one or more banks. 12 U.S.C. § 1841(a) (2011). An 

industrial loan company is an FDIC-supervised, state-chartered financial institution whose 

distinct features include the fact that it can be owned by a commercial firm that is not 

regulated by a federal banking agency.

19Mandatory convertible preferred stock is a type of preferred share that must be 

converted to common stock on or before a certain contractual date. Also, in May 2009, 

Treasury exercised its option to exchange its $884 million loan with Old GM for a 35.4 

percent common ownership share in GMAC

20A trust preferred security is a security that has both equity and debt characteristics, 

created by establishing a trust and issuing debt to it. Their use in meeting certain capital 

requirements was restricted by the Dodd-Frank Wall Street Reform and Consumer 

Protection Act, Pub. L. No. 111-203, § 171, 124 Stat. 1376, 1433-35 (2010).
Page 8 GAO-14-6 Troubled Asset Relief Program

preferred shares into common stock, increasing its common equity 

stake from 35 percent to 56.3 percent.

• In December 2010, Treasury converted preferred stock in Ally 

Financial that had a liquidation preference of $5.5 billion into common 

stock. This stock conversion resulted in Treasury’s owning 

approximately 74 percent of Ally Financial. In addition, as of 

September 2013, Treasury continues to hold $5.9 billion of Ally 

Financial’s mandatory convertible preferred shares. Ally Financial 

pays a 9.0 percent fixed dividend annually to Treasury on these 

preferred shares.21

As of June 2013, Ally Financial was the 20th largest U.S. bank holding 

company, with total assets of $150.6 billion. Its primary line of business is 

auto financing—both consumer financing and leasing and dealer floorplan financing. As a bank holding company, Ally Financial is regulated 

and supervised by the Federal Reserve.

As will be discussed later in this report, Ally 

Financial has entered into an agreement with Treasury to repurchase 

the mandatory convertible preferred shares with possible completion 

of the transaction sometime later this year.

22 In addition, Ally Financial owns 

Ally Bank, an Internet and-telephone-based, state-chartered nonmember 

bank that is supervised by the FDIC and the Utah Department of 

Financial Institutions. Ally Bank has over $92 billion in assets and $50.8 

billion in total deposits, as of June 30, 2013.

 21Ally Financial is a privately held institution. These institutions did not issue warrants to 

purchase shares of common stock for TARP investments. Instead, Treasury received from 

privately held institutions warrants to purchase a specified number of shares of preferred 

stock (warrant preferred stock) that paid annual dividends at 9 percent. Unlike the 

warrants issued by publicly held institutions, such as Bank of America Corporation or 

Citigroup, Inc., Treasury exercised these warrants immediately.

2212 U.S.C. § 1844(b)-(c).
Page 9 GAO-14-6 Troubled Asset Relief Program

Since receiving federal assistance, GM has shown increasingly positive 

financial results. For each of the last 3 years, GM has reported profits, a 

positive and growing operating cash flow, and a stable liquidity position. 

This improved financial performance has been reflected in GM’s credit 

ratings, with each of the three largest credit rating agencies increasing 

GM’s long-term credit rating. Although Moody’s upgraded GM’s rating to 

investment grade on September 23, 2013, Standard and Poor’s and Fitch 

Ratings rate GM as below investment grade as of the same month. 

Furthermore, GM’s market share of vehicles sold in North America was 

smaller than in 2008, and it continued to carry large pension liabilities.

Based on our analysis of GM’s reported financial data, the company’s 

financial performance has improved since 2008. We assessed GM’s 

financial performance by examining its reported net income, operating 

income, and operating cash flow.

23

• Net income (loss): Net income (net profit or loss) is the difference 

between total revenues and expenses and represents the company’s 

income after all expenses and taxes have been deducted. For 2010, 

2011, and 2012, GM reported net income of $6.5 billion, $9.3 billion, 

and $6.1 billion, respectively (see table 1). In 2008, prior to the federal 

government’s assistance and Old GM’s bankruptcy, GM reported a 

net loss of $30.9 billion. As we found in our prior work, a key result of 

the restructuring was that GM lowered its fixed costs by reducing the 

number of employees, plants, and dealerships, among other things.

 

24

Reduced fixed costs allow GM to be profitable with fewer sales, 

thereby lowering its “break-even” level.

• Operating income (loss): Operating income (loss) describes a 

company’s profit and loss from its core operations. It is the difference 

between the revenues of a business and the related costs and 

expenses, excluding income from sources other than its core 

 23Data are from GM’s Form 10-Ks, in the year, they were reported. Subsequent 

adjustments may have been made in later corporate filings. 

24GAO-11-471.

Financial Condition of 

GM and Ally Financial

General Motors’s Financial 

Results Have Been 

Increasingly Positive Since 

Receiving Federal 

Assistance, but Questions 

Remain
Page 10 GAO-14-6 Troubled Asset Relief Program

business (e.g., income derived from investments). GM reported 

operating income of $5.1 billion and $5.7 billion in 2010 and 2011, 

respectively (see table 1). In 2012, GM took an approximate $27 

billion goodwill impairment charge that significantly reduced its 

operating income, contributing to a $30.4 billion operating loss.25

• Operating cash flow: Operating cash flow refers to the amount of cash 

generated by a company’s core business operations. Operating cash 

flow is important because it indicates whether a company is able to 

generate sufficient positive cash flow to maintain and grow its 

operations, or requires external financing. In its 2010, 2011, and 2012 

annual reports, GM reported operating cash flow of $6.6 billion, $7.4 

billion, and $9.6 billion, respectively. Further, in 2010 GM reported 

total available liquidity from automotive operations of $32.5 billion, 

including $5.9 billion from credit facilities. This amount had increased 

slightly by 2012, when GM reported total available liquidity of $37.2

billion, including $11.1 billion from credit facilities. Finally, GM 

reported current assets greater than current liabilities from 2010 

through 2012, indicating that it could meet all current liabilities without 

additional financing.

Table 1: GM’s Net Income, Operating Income and Cash Flow (in billions), 2008-2012

2008 2010 2011 2012

Net income (loss) ($30.9) $6.5 $9.3 $6.1

Operating income (loss) (21.2) 5.1 5.7 (30.4)

Operating cash flow (12.1) 6.6 7.4 9.6

Source: GAO’s review of GM filings with the Securities and Exchange Commission (SEC). Net income for 2010, 2011, and 2012 

excludes non-controlling interests. Data are from GM Form10-Ks, in the year they were reported. Subsequent adjustments may have 

been made in later corporate filings.

 25Subsequent to its 2012 annual goodwill impairment testing, GM reversed $36.2 billion of 

its deferred tax asset valuation allowances for its GM North America reporting unit. The 

reversal of the deferred tax asset valuation allowances resulted in the carrying amount of 

GM’s GM North America reporting unit exceeding its fair value. As a result, GM performed 

an event-driven goodwill impairment test in the 3 months ended December 31, 2012. 

Based on the results of this test, GM recorded a goodwill impairment charge of $26.4 

billion in the 3 months ended December 31, 2012. The remaining goodwill impairment 

charges were from GM’s European and international operations operating units. According 

to the Federal Accounting Standards Board (FASB), an impairment exists when the 

carrying amount of goodwill exceeds its implied fair value. If the carrying amount exceeds 

the implied fair value, the difference is recognized as an impairment loss. However, the 

recognized loss cannot be more than the carrying amount. (ASC 350-20-35-2 and 350-20-

35-11)
Page 11 GAO-14-6 Troubled Asset Relief Program

Note: We did not include information for 2009 because GM began operations that year. 

Consequently, annual data for 2009 are not comparable to data for previous or subsequent years. 

Information for 2008 is for Old GM. On July 10, 2009, GM applied fresh-start reporting, following the 

guidance in Accounting Standards Codification (ASC) 852, “Reorganizations” (ASC 852). The 

consolidated financial statements for the periods ended on or before July 9, 2009, do not include the 

effect of any changes in the fair value of assets or liabilities as a result of the application of fresh-start 

reporting. GM’s financial information at and for any period after July 10, 2009, is not comparable to 

Old GM’s financial information, which is provided only for reference.

These improvements in GM’s financial performance have been reflected 

in its credit ratings. A credit rating is an assessment of the credit 

worthiness of an obligor as an entity or with respect to specific securities 

or money market instruments.26 Credit ratings are important because 

investors and financial institutions may consider them when making 

investment and lending decisions. The three largest credit rating agencies 

have each increased GM’s long-term credit rating two steps in the past 3 

years.27

Although GM’s financial performance has improved significantly since the 

company initially received federal assistance, questions remain about 

competitiveness and costs. One of the factors in GM’s improved financial 

condition has been increased sales of automobiles generally, including 

GM’s, over the last 3 years. Overall, North American vehicle sales 

increased more than 23 percent from 2010 to 2012, rising from 14.4 

million to 17.8 million. Over this same period, sales of GM automobiles in 

North America increased 15 percent, from 2.6 million to 3 million. 

However, GM’s North American market share generally has declined over 

Fitch Ratings and Standard and Poor’s raised their long-term 

rating on GM from BB- to BB+. Moody’s raised its long-term corporate 

family rating on GM from Ba2 to Baa3, an investment grade rating (i.e., 

the issuer or bond has a relatively low risk of default). Comparatively, 

Standard and Poor’s also rates Ford Motor Company as one step below 

investment grade, with a positive outlook. Fitch and Moody’s upgraded 

Ford to an investment grade rating in April and May 2012, respectively. 

Toyota, another competitor of GM, maintains an investment grade rating 

with all three of these credit rating agencies.

 26Securities Exchange Act of 1934, Pub. L. No. 73-291, § 3(a)(60), 48 Stat. 881 (codified 

at 15 U.S.C. § 78c(a)(60)).

27 Each of the three credit rating agencies uses its own methodology to evaluate 

qualitative and quantitative information about a company to develop its rating. These 

ratings are considered opinions of the credit rating agencies.
Page 12 GAO-14-6 Troubled Asset Relief Program

the past 5 years (see fig. 1).28

Figure 1: GM’s North American Market Share, 2008-2013

In 2008, GM reported capturing 21.5 

percent of the North American market, compared with 16.9 percent in 

2012. GM reported that its North American market share was 17.2 

percent through the second quarter of 2013.

Another factor contributing to GM’s financial performance has been its 

ability to control labor costs. GM’s ability to remain competitive will also 

depend on its ability to continue to control costs, in particular its labor 

costs. Labor costs refer to the costs that GM incurs to pay workers to 

build its vehicles at factories in the United States and elsewhere. Through 

its restructuring, GM lowered labor costs, in part by reducing its workforce 

and making more efficient use of its remaining workers. For instance, it 

has closed plants and run additional shifts at existing plants, increasing 

production capacity at those plants. In September 2011, GM and the 

 28GM’s worldwide market share from 2008 to 2012 remained largely flat. In 2008 GM 

reported worldwide market share of 12.4 percent, compared with 11.5 percent in 2012. 
Page 13 GAO-14-6 Troubled Asset Relief Program

UAW reached an agreement on a new 4-year contract that would 

increase the company’s labor costs by 1 percent annually, according to 

GM executives. In November 2011, the Center for Automotive Research 

(CAR) reported that GM’s 2011 labor costs of $56/hour—while still among 

the highest in the industry—were in line with those of its competitors. 

CAR reported that Ford and Toyota had labor costs of $58 and $55 per 

hour, respectively. As we concluded in prior work, maintaining competitive 

labor costs in future negotiations is important to GM’s bottom line.29

Finally, GM’s large pension obligations could have a potential impact on 

GM’s costs. Based on our analysis of GM’s filings with the Securities and 

Exchange Commission (SEC), GM reported U.S. pension plan assets of 

$68 billion and obligations of $82 billion in 2012, creating an underfunded 

position of approximately $14 billion.

 GM 

officials told us another important factor in maintaining competitiveness is 

GM’s ability to design, build, and sell vehicles that customers want to 

purchase. 

30 This underfunded position is 

somewhat less than in fiscal year 2009, when it reported an underfunded 

position of $17.1 billion. Prior to its receipt of government assistance and 

restructuring, GM had taken steps to reduce the risk it faced from its 

underfunded plan, including modifying or closing plans to new hires or 

halting further benefit accruals.31

 29

More recently, it offered selected 

salaried retirees an option to receive a lump-sum settlement and those 

selected salaried retirees that did not elect a lump-sum had their benefit 

settled with GM via the purchase of an annuity contract with an insurance 

company. GM paid lump-sum payments totaling $3.6 billion and a total 

annuity premium of $27 billion in exchange for the insurance company 

assuming future obligations to the beneficiaries. Some analysts with 

whom we spoke saw this move as largely net neutral because of the 

amount of cash GM used to complete this transaction. Others viewed it 

somewhat positively for GM because, despite the cash used, the transfer 

GAO-11-471.

30Plan liabilities and assets reflect measurements in accordance with Financial Accounting 

Standards. Both plan liabilities and assets could grow or diminish overtime, depending on 

such factors as investment returns, interest rates, changes in plan demographics, and 

whether benefits are revised in future years. 

31We have previously reported on GM’s pension plan and steps it has taken to reduce the 

size of its pension obligations. See GAO, Troubled Asset Relief Program: Automaker 

Pension Funding and Multiple Federal Roles Pose Challenges for the Future, 

GAO-10-492,(Washington, D.C.: April 6, 2010).
Page 14 GAO-14-6 Troubled Asset Relief Program

reduces the risk of future volatility in the company’s cash pension 

obligations. GM does not expect any mandatory contributions to the 

pension plans in the next several years.32

Figure 2: Trends in GM’s U.S. Pension Plans’ Liabilities and Assets

Figure 2 shows the trends in 

GM’s U.S. pension plans’ liabilities and assets.

Note: U.S. pension data were taken from the benefit obligations and the fair value of plan assets on 

December 31 of the corresponding year.

With Treasury’s investments in Ally Financial, the company’s condition 

has stabilized. To assess Ally Financial’s condition, we examined multiple 

capital, profitability, and liquidity measures. These measures suggest that 

Ally Financial’s financial performance is improving. The three largest 

credit rating agencies have noted these improvements by upgrading Ally 

Financial’s rating. However, the ratings remain below investment grade, 

 32Minimum funding requirements are set forth in the Employee Retirement Income 

Security Act of 1974. Pub. L. No. 93-406, 88 Stat. 829 (codified as amended at 29 U.S.C. 

§§ 1001-1461). For more information, see GAO-10-492. 

Financial Condition of Ally 

Financial Has Stabilized, 

but Challenges Remain
Page 15 GAO-14-6 Troubled Asset Relief Program

and Ally’s mortgage unit—Residential Capital LLC—impacted the 

company’s financial performance.

Ally Financial’s capital position has remained the same or improved since 

2009. Capital can be measured in several ways, but we focused on tier 1 

capital because it is currently the strongest form of capital.33 We 

examined Ally Financial’s tier 1 capital ratio and tier 1 leverage ratio and 

compared them to minimums required under the Federal Reserve’s 

capital adequacy guidelines for bank holding companies. We also 

examined Ally Financial’s tier 1 common ratio. The Federal Reserve has 

long held the view that bank holding companies generally should operate 

with capital positions well above the minimum regulatory capital ratios, 

with amount of capital held commensurate with a bank holding company’s 

risk profile.34

• Tier 1 capital and common capital ratios: A tier 1 capital ratio 

measures tier 1 capital as a percentage of risk-weighted assets. As 

shown in table 2, Ally Financial’s tier 1 capital ratio increased from 

2009 to 2010 but declined slightly in 2011 and 2012. Federal Reserve 

 33Tier 1 capital is currently considered the most stable and readily available capital that a 

banking institution can have to support its operations by absorbing unexpected financial 

losses. It consists of core capital elements, such as common stockholders’ equity and 

noncumulative perpetual preferred stock. As defined in the Federal Reserve’s Risk-Based 

Capital Adequacy Guidelines, tier 1 capital is composed of common and non-common 

equity elements, some of which are subject to limits on their inclusion in tier 1 capital. See

12 CFR § 225, Appendix A, § II.A.1. These elements include common stockholders’

equity, qualifying perpetual preferred stock, certain minority interests, and trust preferred 

securities. Certain intangible assets, including goodwill and deferred tax assets, are 

deducted from tier 1 capital or are included subject to limits. See 12 CFR § 225, Appendix 

A, § II.B. Tier 1 common capital is tier 1 capital less the non-common elements of tier 1 

capital, including perpetual preferred stock and related surplus, minority interest in 

subsidiaries, trust preferred securities, and mandatory convertible preferred securities. 12 

CFR §225.8(c)(8). Common equity is considered the most loss-absorbing form of capital.

In July 2013, the federal banking regulators issued revised requirements for minimum 

capital, regulatory capital, and additional capital “buffers” to enhance the resiliency of 

banking organizations during periods of financial stress. These new standards will be 

implemented over multiple years. Regulatory Capital Rules: Regulatory Capital, 

Implementation of Basel III, Capital Adequacy, Transition Provisions, Prompt Corrective 

Action, Standardized Approach for Risk-Weighted Assets, Market Discipline and 

Disclosure Requirements, Advanced Approaches Risk-Based Capital Rule, and Market 

Risk Capital Rule, 78 Fed. Reg. 62019 (Oct. 11, 2013); 78 Fed. Reg. 55340 (Sept. 10, 

2013).

34Capital Plans, 76 Fed. Reg. 74631, 74632 (Dec. 1, 2011); see also Capital Adequacy 

Guidelines for Bank Holding Companies, 12 CFR § 225, Appendix A, § I.
Page 16 GAO-14-6 Troubled Asset Relief Program

Capital Adequacy Guidelines require bank holding companies to have 

a tier 1 risk-based capital ratio of at least 4 percent.35 Ally Financial’s 

tier 1 one capital ratio met or exceeded the minimum ratio required 

each year from 2009 through 2012. A tier 1 common capital ratio 

measures common capital—that is, the common equity component of 

tier 1 capital as a share of risk-weighted assets. Ally Financial’s tier 1 

common ratio has increased from 4.85 percent at year-end 2009 to 

6.98 percent at the end of the first quarter of 2013.36 Higher tier 1 

capital and common capital ratios may indicate that a bank holding 

company is in a better position to absorb financial losses.

• Tier 1 leverage ratio: A tier 1 leverage ratio shows the relationship 

between a banking organization’s core capital and total assets. The 

tier 1 leverage ratio is calculated by dividing the tier 1 capital by the 

firm’s average total consolidated assets. Generally, a larger tier 1

leverage ratio indicates that a company is less risky because it has 

more equity to absorb losses in the value of its assets. Ally Financial’s 

leverage ratio remained largely unchanged from 2009 through 2012 

(see table 2).

Table 2: Ally Financial Capital Ratios, 2009-2012

2009 2010 2011 2012 

Tier 1 capital ratio 14.15% 15.00% 13.71% 13.13%

Tier 1 common capital ratioa 4.85 8.57 7.57 6.98

Tier 1 leverage ratio 12.70 13.05 11.50 11.16

Source: GAO’s analysis of Ally Financial filings with SEC. Data are from Ally Financial Form10-Ks, in the year they were reported. 

Subsequent adjustments may have been made in later corporate filings.

a

Federal Reserve Capital Adequacy Guidelines do not require a minimum tier 1 common capital ratio. 

However, companies subject to the Federal Reserve’s capital plan rule must develop a capital plan 

that demonstrates the company’s ability to meet a tier 1 common ratio above 5 percent under 

stressed conditions. See 12 CFR 225.8(d)(2) (i)(B).

 3512 C.F.R. 225, Appendix G, § 3(a)(1)(ii). Federal Reserve Capital Adequacy Guidelines 

require bank holding companies to have a minimum tier 1 risk-based capital ratio of 6 

percent to be considered well capitalized. 12 C.F.R. § 225.2(r)(ii).

36As previously mentioned, GMAC (now Ally Financial) became a bank holding company 

in December 2008. We examined financial data from 2009 to 2013 because Ally Financial 

became subject to new regulatory and reporting requirements when it became a bank 

holding company.
Page 17 GAO-14-6 Troubled Asset Relief Program

Ally Financial’s profitability has also improved since 2009. We examined 

several measures of profitability, including net income (loss), net interest 

spread, return on assets, and nonperforming assets ratio.

• Net income (loss): Ally Financial suffered a net loss in 2009 of $10 

billion, but has reported net income for 2 of the last 3 years. As shown 

in figure 3, the 2009 loss was driven by substantial losses in its 

mortgage business operating unit. Ally Financial reported net income 

of $1.1 billion in 2010, a loss of $160 million in 2011, and net income 

of $1.2 billion in 2012.

Figure 3: Ally Financial Net Income (Loss) by Operating Unit, 2009-2012

Notes: Data are from Ally Financial 10-Ks, in the year they are reported. Subsequent adjustments 

may have been made in later corporate filings. Total reported net income does not always equal the 

sum of the three operating units because of the exclusion of “other” income.

• Net interest spread: The net interest spread is the difference between 

the rate on total interest-earning assets and the rate on total interestbearing liabilities, excluding discontinued operations for the period. In 

general, the larger the spread, the more a company is earning. Ally 
Page 18 GAO-14-6 Troubled Asset Relief Program

saw its net interest spread increase from a reported .58 percent at the 

end of 2009 to 1.14 percent at the end of 2012 (see table 3).

• Return on assets (ROA): ROA is calculated by dividing a company’s 

net income by its total assets. It is an indication of how profitable a 

company is relative to its total assets and gives an idea of 

management’s efficiency in using its assets to generate earnings. A 

higher ROA suggests that a company is using its assets efficiently. 

Ally reported improved ROA from the end of 2009 to 2012, with a 

reported negative 5.79 percent ROA for 2009 and a positive .65 

percent in 2012 (see table 3).

• Nonperforming asset ratio: This ratio measures asset quality by 

dividing the value of nonperforming assets by the value of total 

assets. The lower the ratio, the fewer poorly performing assets a 

company holds. As shown in table 3, Ally’s nonperforming asset ratio 

fell from 4.36 percent for the fourth quarter of 2009 to 1.06 percent for 

the fourth quarter of 2012.

Table 3: Selected Financial Performance Metrics for Ally Financial, 2009-2012

Financial performance metric 2009 2010 2011 2012

Net interest spread .58 1.23 1.07 1.14

Return on assets (5.79) .61 (.09) .65

Nonperforming asset ratioa 4.36 3.46 2.69 1.06

Source: GAO analysis of Ally Financial filings with SEC. Data are from Ally Financial Form 10-Ks, in the year they were reported. 

Subsequent adjustments may have been made in later corporate filings.

a

Nonperforming asset ratio data from SNL Financial for December of corresponding year.

In addition, Ally Financial’s liquidity position has generally stabilized since 

2009. To examine Ally Financial’s liquidity position, we examined the 

company’s total liquidity ratio, bank deposits, and operating cash flow.

• Total liquidity ratio: Liquidity ratios measure a bank’s total liquid 

assets against its total liabilities. Generally, a high ratio indicates a 

relatively large margin of safety in covering short-term debts. Overall, 

Ally Financial’s liquidity ratio remained stable from 2009 through the 

third quarter of 2012 (see fig. 4). Reductions in the fourth quarter of 

2012 ratio are associated with the repayment of $7.4 billion in 
Page 19 GAO-14-6 Troubled Asset Relief Program

Temporary Liquidity Guarantee Program debt.37

Figure 4: Ally Financial Liquidity Ratio, June 2009-June 2013

For the quarter 

ending June 30, 2013, Ally Financial reported a total liquidity ratio of 

18.7 percent.

• Bank deposits: Bank deposits are the funds that consumers and 

businesses place with a bank, and growth in deposits is an important 

factor in the bank’s liquidity position. From December 2008 to 

December 2012, Ally Bank saw its deposits grow from $19.2 billion to 

$46.9 billion. Deposits accounted for 37 percent of Ally’s total funding 

as of the fourth quarter of 2012, offering the company a low-cost 

source of funding that is less sensitive to interest rate changes and 

market volatility than other sources of funding.

 37FDIC created the Temporary Liquidity Guarantee Program in October 2008 to 

encourage liquidity in the banking system by guaranteeing newly issued senior unsecured 

debt of banks, thrifts, and certain holding companies and providing full coverage of noninterest-bearing deposit transaction accounts. In 2009, Ally Financial issued $7.4 billion in 

debt under this program with maturity dates in October and December 2012. Ally Financial 

repaid $2.9 billion on October 30, 2012, and the remaining $4.5 billion on December 19, 

2012.
Page 20 GAO-14-6 Troubled Asset Relief Program

• Operating cash flow: From the first quarter of 2009 through the 

second quarter of 2013, Ally Financial generated positive cash flow 

from operating activities in all but 6 quarters (see fig. 5). However, as 

the figure shows, cash flows have also varied greatly over this period.

In each of the last 3 years, the company repaid unsecured debt 

maturities averaging more than $10 billion, a move that could improve 

its cash flow by reducing the amount required to service its debt.

Analysts expect Ally’s annual unsecured maturities to be substantially 

lower going forward, and the company reported annual maturities of 

$5.6 billion or less for the years 2014 through 2018.

Figure 5: Ally Financial Operating Cash Flow, January 2009-June 2013

Ally Financial’s improving financial condition is reflected in its credit rating.

Ally’s long-term credit rating with two of the three largest credit rating 

agencies has seen multiple upgrades since 2009. Currently, Ally’s longterm ratings with Moody’s, Standard and Poor’s, and Fitch Ratings are 

B1, B+, and BB-, respectively. However, these ratings all remain below 

investment grade.

According to analysts with whom we spoke, Ally’s mortgage unit, ResCap 

impacted the company’s financial condition. Recent events are providing 

a clearer picture of Ally Financial’s potential exposure to ResCap’s 
Page 21 GAO-14-6 Troubled Asset Relief Program

obligations. ResCap filed for bankruptcy in May 2012.38 In June 2013, a 

bankruptcy judge approved a settlement agreement that releases Ally 

Financial from any and all legal claims by ResCap and many of its 

creditors in exchange for $2.1 billion in cash from Ally Financial and its 

insurers.39 In June 2013, the bankruptcy judge also granted ResCap 

permission to repay $1.1 billion in debt owed to Ally.40 The agreement still 

must be incorporated into ResCap’s formal plan for exiting bankruptcy 

and be approved by the bankruptcy court.41 Hearings on this agreement 

and related motions are scheduled to take place later this year. According 

to analysts with whom we spoke, knowing the amount of Ally Financial’s 

final potential exposure to ResCap and that Ally Financial will no longer 

support ResCap financially are positive developments for the company’s 

future financial condition. Treasury officials told us that in their view, the 

recent ResCap settlement agreement between the ResCap creditors 

(other than the FDIC and the FHFA) and Ally Financial resolves the 

uncertainty of the ResCap bankruptcy and Ally Financial’s potential 

financial liabilities related to ResCap.

 38See Voluntary Petition, In re Residential Capital, LLC, No. 1:12-12020 (Bankr. S.D.N.Y. 

May 14, 2012). 

39See Order Granting Debtors’ Motion for an Order Under Bankruptcy Code Sections 

105(A) and 363(B) Authorizing the Debtors to Enter Into a Plan Support Agreement with 

Ally Financial Inc., the Creditors’ Committee, and Certain Consenting Claimants, In re

Residential Capital, LLC, No. 1:12-12020 (Bankr. S.D.N.Y. June 26, 2013); Debtors’

Motion for an Order Under Bankruptcy Code Sections 105(A) and 363(B) Authorizing the 

Debtors to Enter Into a Plan Support Agreement with Ally Financial Inc., the Creditors’

Committee, and Certain Consenting Claimants at 7, In re Residential Capital, LLC, No. 

1:12-12020 (Bankr. S.D.N.Y. May 23, 2013). The agreement does not include claims 

made by the Federal Housing Finance Agency and Federal Deposit Insurance 

Corporation.

40See Order Granting Debtors’ Motion for Entry of an Order Under 11 U.S.C. §§ 105 and 

363 Authorizing the Debtors To Satisfy Certain Secured Claims at 2, In re Residential 

Capital, LLC, No. 1:12-12020 (Bankr. S.D.N.Y. June 13, 2013).

41See Joint Chapter 11 Plan Proposed by Residential Capital, LLC, et al., and the Official 

Committee of Unsecured Creditors, In re Residential Capital, LLC, No. 1:12-12020 (Bankr. 

S.D.N.Y. July 3, 2013). 
Page 22 GAO-14-6 Troubled Asset Relief Program

Treasury invested over $51 billion in GM through AIFP. In exchange for 

this assistance, Treasury received 60.8 percent of the common equity in 

GM, $2.1 billion in preferred stock, and $7.1 billion in notes from GM. 

Through September 18, 2013, Treasury had recovered about $35.21

billion of its investments in GM and reduced its ownership stake to 7.32 

percent through three major actions.42 As of September 18, 2013, 

Treasury has recouped $37.75 billion from its GM and Ally Financial 

investment.43

First, Treasury participated in GM’s IPO in November 2010, selling about 

412.3 million shares at an average price per share of approximately 

$32.75. This sale generated $13.5 billion for Treasury and reduced its 

ownership share to 32 percent. As we found in our 2011 report, by 

participating in GM’s IPO, Treasury tried to fulfill two goals—to maximize 

taxpayers’ return and to exit the company as soon as practicable.44

Second, GM and Treasury entered into an agreement that allowed GM to 

repurchase 200 million shares in December 2012. According to GM, as a 

general matter, GM was interested in reducing Treasury’s interest in GM 

and facilitating Treasury’s eventual complete exit from GM ownership. 

GM purchased the shares at $27.50 per share, about 7.8 percent over the 

market price of about $25.50. This generated about $5.5 billion in 

revenue for Treasury and further reduced its ownership interest to just 

over 22 percent. GM officials said that they determined the premium price

based on an arms-length negotiation between GM and Treasury. 

According to GM officials, the decision to agree to a premium price 

 42In May 2010, GM repaid to Treasury the $6.7 billion TARP loan.

43The amount of recoupment does not include dividends, interest, and other income 

Treasury has realized on its investments.

44GAO-11-471.

Treasury Is Working 

to Exit from Its 

Remaining 

Investments in GM 

and Ally Financial

Treasury Plans to Exit 

from GM by Early 2014 but 

Projects a Loss on its 

Investment
Page 23 GAO-14-6 Troubled Asset Relief Program

reflected the benefits GM and other stakeholders received from the 

transaction, including increased knowledge as to when and how Treasury 

was going to exit its holdings thereby eliminating the perceived 

“overhang” on GM’s common stock price; mitigation of the stigma 

associated with the “Government Motors” moniker that negatively 

impacted customer perceptions; and the fact that the transaction was 

accretive to earnings. Furthermore, as part of the transaction, Treasury 

agreed to remove certain governance and reporting requirements. 

Treasury announced in December 2012 that it planned to divest fully of its 

GM common equity stake within 12-15 months, subject to market 

conditions.

Third, to achieve its goal of fully divesting by 2014, Treasury has 

developed and is implementing an exit strategy to sell its shares in 

tranches. Similar to the process Treasury used to divest its ownership in 

Citigroup, Treasury began placing its GM shares on the market in 

tranches, or “dribbles,” for a specific time period, beginning in January 

2013.45

Although Treasury has implemented a plan to divest itself of its ownership 

stake in GM, it does not anticipate fully recouping its investments. In 

September 2013, Treasury projected approximately at least a 19 percent 

loss on its GM investment. The extent of the loss, however, will depend 

on GM’s stock price. As shown in figure 6, the price of GM’s stock is not 

at the level needed for Treasury to fully recoup its investment.

Treasury reports these sales after the end of each period for 

selling a particular tranche. According to Treasury officials, in the case of 

GM, the dribble approach is a better divestment method than discrete 

large offerings given the remaining size of its equity holdings and time 

frame in which it is planning to exit. Furthermore, the dribble approach 

helps (1) secure the highest possible prevailing market price for 

taxpayers, (2) limit the impact of additional supply in the market, and (3) 

ensures that Treasury has flexibility to average the proceeds over time 

and make adjustments if necessary. As of September 2013, Treasury has 

sold over 811 million shares for more than $25 billion, leaving it with 

101,336,666 shares which represent a 7.32 percent ownership stake in 

GM. On September 26, 2013, Treasury announced it was launching a 

third pre-defined written trading plan for its GM common stock.

 45Treasury contracted with financial institutions to develop and implement the dribble 

approach for selling the GM shares.
Page 24 GAO-14-6 Troubled Asset Relief Program

Nevertheless, according to Treasury officials, Treasury has continued to 

sell its shares in line with its guiding principle of exiting its TARP 

investments as soon as practicable while maximizing return to taxpayers.

Doing so, however, has increased the break-even price—that is, the price 

the stock must reach for Treasury to fully recoup its investment—for its 

remaining shares. Based on our analysis, we estimate that GM’s stock 

price would have to reach $156 per share for Treasury to fully recoup its 

investment as of September 16, 2013. At the beginning of September 

2013, GM’s stock was trading at around $36 per share.

Figure 6: Breakeven Price for GM Shares Needed for Treasury to Fully Recoup Its Investment

Although Treasury’s ownership stake in Ally Financial has remained 

unchanged for the last 3 years at about 74 percent, the company has 

recently announced planned actions that will facilitate Treasury’s exit, 

pending regulatory approval. As of September 2, 2013, Treasury has 

recovered about $2.5 billion of the $16.3 billion invested in Ally Financial 

from a sale of trust preferred shares.46

 46Treasury has also received about $3.4 billion in dividend payments from Ally Financial.

Treasury’s remaining investment in 

Treasury Is Working to 

Exit from Ally Financial 

and Faces Challenges 

Unwinding Its Investments
Page 25 GAO-14-6 Troubled Asset Relief Program

Ally Financial consists of common stock and $5.9 billion in mandatory 

convertible preferred shares. In August 2013, Ally Financial announced 

plans, discussed below, to repurchase the mandatory convertible 

preferred shares.

Treasury has stated that it would like to divest itself of its ownership stake 

in Ally Financial in a manner that balances the speed of recovery with 

maximizing returns for taxpayers. Furthermore, Treasury has stated that it 

will unwind its remaining common stock investment through a sale of 

stock (either public or private sale) or through future sales of assets. As of 

September 2013, Treasury has announced the plan for unwinding its 

preferred stock investments in Ally Financial, though not for its common 

stock investment. According to Treasury officials, Treasury will announce 

its precise plans for the common stock investment once it is ready to take 

action.

To accelerate repayment of Treasury’s investment and strengthen its 

longer term financial profile, Ally Financial announced in May 2012 that it 

was undertaking two strategic initiatives. These initiatives were (1) the 

discontinuation of providing financial support to its subsidiary ResCap 

pursuant to the ResCap bankruptcy and (2) the sale of its international 

auto finance business. ResCap’s mortgage business created significant 

uncertainty for Ally Financial and thus an impediment to Ally Financial’s 

ability to repay Treasury’s investment. Also, Ally Financial sought to sell 

its international operations as a means to accelerate repayment plans to 

Treasury. At the same time as Ally Financial’s announcement last year, 

Treasury stated that the company’s two strategic initiatives would put 

taxpayers in a stronger position to continue recovering their investment in 

Ally Financial. As previously noted, Ally Financial achieved a settlement 

agreement with the ResCap creditors, which was approved by the 

bankruptcy court in June 2013. In addition, during the second quarter of 

2013, Ally Financial completed the sale of its international auto finance 

business in Europe and the majority of its finance operations in Latin 

America. Ally Financial plans to complete the sale of its remaining 

international assets—its operations in Brazil and its joint venture in 

China—in late 2013 and 2014, respectively.

However, in exiting its Ally Financial investment, Treasury faces 

challenges and considerations, including Ally Financial’s failure to meet 

Federal Reserve capital requirements and competition from other 

institutions, which may ultimately affect the price of Ally Financial stock 

once the company is publicly traded.
Page 26 GAO-14-6 Troubled Asset Relief Program

In contrast to GM, Ally Financial is a regulated bank holding company that 

must receive the Federal Reserve’s approval before it can repurchase its 

preferred shares from Treasury. However, Ally Financial’s initial plan to 

repurchase the mandatory convertible preferred shares stalled after the 

Federal Reserve objected to its proposed capital plan in the spring 2013 

Comprehensive Capital Analysis and Review (CCAR). The Dodd-Frank 

Wall Street Reform and Consumer Protection Act requires the Federal 

Reserve to conduct an annual supervisory stress test of bank holding 

companies with $50 billion or more in total consolidated assets to 

evaluate whether the companies have sufficient capital to absorb losses 

resulting from adverse economic conditions.47 As part of the stress test 

for each company, the Federal Reserve projects revenue, expenses, 

losses, and resulting post-stress test capital levels, regulatory capital 

ratios, and the tier 1 common ratio under three scenarios (baseline, 

adverse, and severely adverse).48 In March 2013, the Federal Reserve 

reported the results of its most recent supervisory stress test and of the 

CCAR exercise. The Federal Reserve found that Ally Financial’s tier 1 

common capital ratio fell below the required 5 percent under the severely 

adverse scenario. Ally Financial was the only one of the 18 bank holding 

companies tested that fell below this required level.49

Further, as previously indicated, the Federal Reserve objected to Ally 

Financial’s capital plans during the 2013 CCAR.50

 47Pub. L. No. 111-203, §165(i)(1)(A), 124 Stat. 1376, 1430 (2010) (codified at 12 U.S.C. § 

5365(i)(1)(A)).

CCAR is an annual 

exercise the Federal Reserve conducts to help ensure that financial 

institutions have robust, forward-looking capital planning processes that 

take into account their unique risks and sufficient capital to continue 

4812 C.F.R. § 252.134(a)(2).

49In 2013 18 bank holding companies were subject to the Dodd-Frank Act stress tests and 

CCAR. These were Ally Financial Inc., American Express Company, Bank of America 

Corporation, The Bank of New York Mellon Corporation, BB&T Corporation, Capital One 

Financial Corporation, Citigroup Inc., Fifth Third Bancorp, The Goldman Sachs Group, 

Inc., JPMorgan Chase and Co., KeyCorp, MorganStanley, The PNC Financial Services 

Group, Inc., Regions Financial Corporation, State Street Corporation, Sun Trust Banks, 

Inc., U.S. Bancorp, and Wells Fargo and Co. 

50In November 2011, the Federal Reserve issued a new regulation requiring large bank 

holding companies to submit an annual capital plan. Capital Plans, 76 Fed. Reg. 74631 

(Dec. 1, 2011) (codified at 12 C.F.R. § 225.8). The same 18 bank holding companies 

subject to the Dodd-Frank stress tests were subject to CCAR.

Capital Requirements
Page 27 GAO-14-6 Troubled Asset Relief Program

operating during periods of economic and financial stress.51 As part of the 

CCAR process, the Federal Reserve evaluates institutions’ capital 

adequacy; internal processes for assessing capital adequacy; plans to 

make capital distributions, such as dividend payments or stock 

repurchases; and other actions that affect capital.52 The Federal Reserve 

may object to a capital plan because of significant deficiencies in the 

capital planning process or because one or more relevant capital ratios 

would fall below required levels under the assumption of stress and 

planned capital distributions.53 If the Federal Reserve objects to the 

proposed capital plan, the bank holding company is only permitted to 

make capital distributions if the Federal Reserve indicates in writing that it 

does not object and must resubmit the capital plan to the Federal 

Reserve following remediation of these deficiencies.

54 Of the 18 bank 

holding companies reviewed in 2013, the Federal Reserve objected to 

Ally Financial’s and one other company’s capital plans.55

According to the Federal Reserve, Ally Financial’s capital ratios did not 

meet the required minimums under the proposed capital plan.

Specifically, the Federal Reserve reported that under stress conditions 

Ally Financial’s plan resulted in a tier 1 ratio of common capital of 1.52 

percent, which is below the required level of 5 percent under the capital 

plan rule. According to the Federal Reserve report, these results 

assumed that Ally Financial remained subject to contingent liabilities 

associated with ResCap. The Federal Reserve required Ally Financial to 

 5112 C.F.R. § 225.8(d).

5212 C.F.R. § 225.8(e).

5312 C.F.R. § 225.8(e)(2)(ii). A capital distribution is defined as a redemption or 

repurchase of any debt or equity capital instrument, a payment of common or preferred 

stock dividends, a payment that may be temporarily or permanently suspended by the 

issuer on any instrument that is eligible for inclusion in the numerator of any minimum 

regulatory capital ratio, and any similar transaction that the Federal Reserve determines to 

be in substance a distribution of capital. 12 C.F.R. § 225.8(c)(2) .

5412 C.F.R. § 225.8(d) (4), (e)(2)(iv).

55The other bank holding company resubmitted a new capital plan under the Federal 

Reserve’s regulation. After reviewing the plan, the Federal Reserve decided not to object 

to the resubmitted capital plan.
Page 28 GAO-14-6 Troubled Asset Relief Program

resubmit a capital plan.56 Ally Financial resubmitted its new capital plan to 

the Federal Reserve in September 2013, and in accordance with federal 

regulation, the Federal Reserve will have 75 days to review the plan.57

On August 19, 2013, Ally Financial announced that it had entered into 

agreements with certain accredited investors to issue and to sell to them 

an aggregate of 166,667 shares of its common stock (private placement 

securities) for an aggregate purchase price of $1 billion. Ally Financial did 

not identify the investors. According to Ally Financial, the agreement 

would strengthen the company’s common equity base and support its 

capital plan resubmission to the Federal Reserve. The agreement 

requires that the private placement close no later than November 30, 

2013. Also on August 19, Ally Financial and Treasury entered into an 

agreement under which Ally Financial is to repurchase all of the 

mandatory convertible preferred shares. The agreement is conditioned on 

Ally Financial receiving a non-objection by the Federal Reserve on its 

resubmitted CCAR capital plan and the closing of the private placement 

securities transaction.

Ally Financial faces growing competition in both consumer lending and 

dealer financing from Chrysler Capital, GM Financial, and other large 

bank holding companies. This competition may affect the future 

profitability of Ally Financial, which could influence the share price of Ally 

Financial once the company becomes publicly traded and thus the timing 

of Treasury’s exit. Similar to its GM investment, the eventual amount of 

Treasury’s recoupment on its Ally Financial investment will be determined 

by the share price of Ally Financial stock.

• Chrysler Capital: In February 2013, Chrysler announced that it had 

entered into an agreement with Santander Consumer USA Inc., a 

 56In its quantitative assessment, the Federal Reserve evaluated each bank holding 

company’s ability to make all planned capital actions in its CCAR capital plan and maintain 

poststress capital ratios of greater than 5 percent of tier 1 common capital and all required 

regulatory minimum levels. The evaluations are based on the results of stress tests run by 

the bank holding companies and poststress capital ratios estimated by the Federal 

Reserve’s CCAR. In the qualitative assessment, the Federal Reserve evaluates the 

analysis underlying the capital plan to determine whether it appropriately addresses 

potential risks based on the reasonableness of the assumptions and analysis underlying 

the capital plan, the robustness of the bank holding company’s capital adequacy process, 

and corporate governance and controls in the capital planning process. 12 C.F.R. § 225.8. 

5712 C.F.R. § 225.8(e)(2)(i)(B). 

Competition from Other 

Lenders
Page 29 GAO-14-6 Troubled Asset Relief Program

subsidiary of Banco Santander, S.A., that specializes in subprime 

auto lending, to provide a full spectrum of auto financing services to 

Chrysler Group customers and dealers under the name of Chrysler 

Capital. Under the 10-year, private-label agreement, Santander 

Consumer USA was to establish a separate lending operation 

dedicated to providing financial services under the Chrysler Capital 

name, including financing for retail loans and leases, new and used 

vehicle inventory, dealership construction, real estate, working capital, 

and revolving lines of credit. The agreement grants Santander 

Consumer USA the right to a minimum percentage of Chrysler’s 

subvention volume and the right to use the Chrysler Capital name for 

its auto loan and lease offerings.58 Santander Consumer USA will also 

provide loans to Chrysler dealers to finance inventory, working capital, 

and capital improvements. On May 1, 2013, Chrysler Capital started 

its lending operations.

• GM Financial: In 2009, GM acquired AmeriCredit Corporation 

(AmeriCredit), a subprime automobile finance company, to serve its 

subprime customers. AmeriCredit was renamed GM Financial and 

made a wholly owned subsidiary of GM. Its target lending market is 

lending to consumers who have difficulty securing auto financing from 

banks and credit unions. According to GM officials, the purpose of GM 

Financial is to drive incremental GM automobile sales by providing 

solid and stable funding for GM dealers and consumers. GM Financial 

would serve as a captive lender for GM, much as GMAC did. This 

year, GM Financial increased its overall assets by purchasing Ally 

Financial’s international assets in Europe and Latin America, including 

the dealer financing arrangements in these countries.

• Other bank holding companies: We compared the amount of Ally 

Financial consumer auto lending with four large bank holding 

companies (Bank of America Corporation, Capital One Financial 

Corporation, JPMorgan Chase & Company, and Wells Fargo & 

Company) that reported consumer automobile loans. These data do 

not include all types of automobile financing, such as automobile 

leasing and dealer financing, only retail consumer automobile loans 

 58Subvention occurs when a manufacturer offers financial incentives through a finance 

company conditioned upon the consumer financing the purchase of a vehicle or leasing a 

car through a finance company.
Page 30 GAO-14-6 Troubled Asset Relief Program

for the time period.59

Figure 7: Dollar Amount of Consumer Auto Loans for Five Large Bank Holding 

Companies, 2011-2013

As shown in figure 7, the dollar amount of 

consumer auto loans Wells Fargo & Company and Capital One 

Financial Corporation made increased from March 2011 through June 

2013. However, Ally Financial remained the leader among the four 

institutions for the same time period.

Treasury officials noted that such competition could also be a benefit 

because Ally Financial’s assets could be viewed as valuable to the other 

 59Consumer automobile loans are defined as the Federal Reserve defines them for bank 

holding company reporting purposes. See Instructions for Preparation of Consolidated 

Financial Statements for Bank Holding Companies, Reporting Form FR Y-9C, Schedule 

HC—Consolidated Balance Sheet. Automobile loans are all consumer loans extended for 

the purpose of purchasing new and used passenger cars and other vehicles such as 

minivans, vans, sport-utility vehicles, pickup trucks, and similar light trucks for personal 

use. Id. at HC-C-13. These loans include both direct and indirect consumer automobile 

loans as well as retail installment sales papers purchased by the bank from automobile 

dealers. Id.
Page 31 GAO-14-6 Troubled Asset Relief Program

competitors. Treasury officials noted that the value of Ally Financial can 

be demonstrated by the recent private placement agreement. Specifically, 

if Treasury sells its Ally Financial common stock at the share price agreed 

to in the private placement agreement—$6,000 per share—Treasury 

would receive a significant profit on its Ally Financial investment.

We provided a draft of this report to FDIC, the Federal Reserve and 

Treasury for their review and comment. In addition, we provided excerpts 

of the draft report to Ally Financial, GM, and Chrysler Capital to help 

ensure the accuracy of our report. 

Treasury provided written comments which are reprinted in appendix II. 

Treasury agreed with the report’s overall findings. In its written 

comments, Treasury describes the auto industry’s recovery and the 

progress Treasury has made in unwinding its investments in Ally 

Financial and GM. Treasury also noted that it expects to complete the 

exit from GM by the first quarter of 2014 and wind down the remaining 

Ally Financial investment either by selling stock in a public or private 

offering, or through future asset sales. 

The Federal Reserve, Treasury, Ally Financial, GM, and Chrysler Capital

provided technical comments that we incorporated as appropriate. In its

technical comments, GM highlighted what third parties have suggested

could have happened had Treasury not provided assistance to the auto 

industry, including the potential adverse effects on unemployment levels 

and tax receipts of all levels of government. FDIC did not provide any 

comments. 

We are sending copies of this report to the appropriate congressional 

committees. This report will also be available at no charge on our website 

at http://www.gao.gov.

If you or your staffs have any questions about this report, please contact 

me at (202) 512-8678 or clowersa@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

Agency and Third 

Party Comments
Page 32 GAO-14-6 Troubled Asset Relief Program

the last page of this report. Key contributors to this report are listed in 

appendix III.

A. Nicole Clowers

Director

Financial Markets

 and Community Investment
Page 33 GAO-14-6 Troubled Asset Relief Program

List of Committees

The Honorable Barbara Mikulski

Chairwoman

The Honorable Richard C. Shelby

Vice Chairman

Committee on Appropriations

United States Senate

The Honorable Tim Johnson

Chairman

The Honorable Mike Crapo

Ranking Member

Committee on Banking, Housing, and Urban Affairs

United States Senate

The Honorable Patty Murray

Chairman

The Honorable Jeff Sessions

Ranking Member

Committee on the Budget

United States Senate

The Honorable Max Baucus

Chairman

The Honorable Orrin G. Hatch

Ranking Member

Committee on Finance

United States Senate

The Honorable Hal Rogers

Chairman

The Honorable Nita Lowey

Ranking Member

Committee on Appropriations

House of Representatives

The Honorable Paul Ryan

Chairman

The Honorable Chris Van Hollen

Ranking Member

Committee on the Budget

House of Representatives
Page 34 GAO-14-6 Troubled Asset Relief Program

The Honorable Jeb Hensarling

Chairman

The Honorable Maxine Waters

Ranking Member

Committee on Financial Services

House of Representatives

The Honorable Dave Camp

Chairman

The Honorable Sander Levin

Ranking Member

Committee on Ways and Means

House of Representatives
Appendix I: Objectives, Scope, and 

Methodology

Page 35 GAO-14-6 Troubled Asset Relief Program

This report is based on our continuing analysis and monitoring of the U.S. 

Department of the Treasury’s (Treasury) activities in implementing the 

Emergency Economic Stabilization Act of 2008 (EESA), which provided 

GAO with broad oversight authorities for actions taken under the Troubled 

Asset Relief Program (TARP).1

This report examines (1) the financial condition of GM and Ally Financial 

and (2) the status of Treasury’s investments in the companies as well as 

its plans to wind down those investments.

Under TARP, Treasury established the 

Automotive Industry Financing Program, through which Treasury 

committed $51 billion to help General Motors Company (GM) and $16.3 

billion to GMAC LLC, a financial services company that provides 

automotive financing and that later became Ally Financial, Inc. (Ally 

Financial).

To assess the financial conditions of GM, we analyzed net income, 

operating income, operating cash flow, operating income, sales of 

automobiles, GM’s share of the North American market, credit ratings, 

and pension obligations and pension plan funding for GM’s U.S. 

employees from 2008 through the second quarter (June 30) of 2013. For 

Ally Financial, we reviewed the institution’s capital ratios, net income, 

operating income, net interest spread, return on assets, nonperforming 

assets ratio, liquidity ratio, bank deposits, operating cash flow, and credit 

ratings, generally from 2008 through the second quarter (June 30) of 

2013. To obtain information on the financial ratios and indicators used in 

their analyses of GM’s or Ally Financial’s financial condition, we 

interviewed staff from Treasury, the Board of Governors of the Federal 

Reserve System (Federal Reserve), Federal Deposit Insurance 

Corporation (FDIC), GM, Ally Financial, and analysts from the three 

largest credit rating agencies as well as investment firms. To select 

analysts from investment firms to interview, we identified analysts who 

covered GM. We identified them using GM’s investor relations webpage 

(http://www.gm.com/company/investors/analyst-coverage.html) and 

selected four to contact based on an electronic search for automotive 

equity analysts cited in reputable trade and business publications. We 

reached out to four analysts and interviewed two. We also interviewed 

analysts responsible for covering GM from one of the credit rating 

agencies and analysts responsible for covering Ally from all three of the 

 1

Pub. L. No. 110-343, § 116, 122 Stat. 3765, 3783 (codified at 12 U.S.C. § 5226). 

Appendix I: Objectives, Scope, and 

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 36 GAO-14-6 Troubled Asset Relief Program

credit rating agencies. The views of these analysts cannot be generalized 

to all analysts from investment firms and credit rating agencies.

We reviewed past GAO reports, information from GM’s and Ally 

Financial’s annual 10-K filings with the Securities and Exchange 

Commission, reports and documentation from Treasury and the 

companies, and data from SNL Financial from 2008 through the second 

quarter (June 30) of 2013. For both GM and Ally Financial, we collected 

information, generally from 2008 through the second quarter (June 30) of 

2013, the most recent information that was publicly available. We have 

relied on SNL Financial data for past reports, and we reviewed past GAO 

data reliability assessments to ensure that we, in all material respects, 

used the data in a similar manner and for similar purposes. For each data 

source we reviewed the data for completeness and obvious errors, such 

as outliers, and determined that these data were sufficiently reliable for 

our purposes. We also reviewed the credit ratings from three rating 

agencies for each of these companies. Although we have reported on 

actions needed to improve the oversight of rating agencies, we included 

these ratings because they are widely used by GM, Ally Financial, 

Treasury, and market participants.

To examine the status of Treasury’s investments and its plans to wind 

down those investments, we reviewed Treasury’s TARP reports, which 

included monthly 105(a) and daily TARP updates on AIFP program data 

for the time period from 2008 through September 2013.2

 2

Under EESA, every 30 days, Treasury must submit to Congress reports on actions taken 

and funds obligated and spent during the reporting period as well as detailed financial 

statements covering, among other items, agreements made, assets purchased, 

transactions that occurred, and the valuation or pricing method used for each transaction.

§105(a), 122 Stat. at 3771-72.

We have used 

Treasury’s data on AIFP in previous GAO reports. We determined that 

the AIFP program data from Treasury were sufficiently reliable to assess 

the status of the program. For example, we tested the Office of Financial 

Stability’s internal controls over financial reporting as they related to our 

annual audit of the office’s financial statements and found the information 

to be sufficiently reliable based on the results of our audit of the TARP 
Appendix I: Objectives, Scope, and 

Methodology

Page 37 GAO-14-6 Troubled Asset Relief Program

financial statements for fiscal years 2009, 2010, 2011, and 2012.3 AIFP 

was included in these financial audits. Using the AIFP program data, we 

analyzed Treasury’s equity ownership and recovery of funds in GM and 

Ally Financial for the time period from January 2009 to September 2013.

We reviewed the data for completeness and obvious errors, such as 

outliers, and determined that these data were sufficiently reliable for our 

purposes. For the divestment of GM equity, we interviewed Treasury and 

GM officials on the December 2012 repurchase of GM shares and the 

“dribble” strategy developed by Treasury. For analyzing Treasury’s exit 

from Ally Financial, we reviewed Treasury and Federal Reserve 

documentation, such as Treasury’s monthly reports to Congress, 

Treasury’s contractual agreements for the mandatory convertible 

preferred shares, and the proposed capital plan that Ally submitted to the 

Federal Reserve. We also reviewed two publicly available reports from 

the Federal Reserve on the Dodd-Frank Wall Street Reform and 

Consumer Protection Act and capital plan analysis, Dodd-Frank Act 

Stress Test 2013: Supervisory Stress Test Methodology and Results and 

Comprehensive Capital Analysis and Review 2013: Assessment 

Framework and Results.4

We conducted this performance audit from March 2013 to October 2013 

in accordance with generally accepted government auditing standards.

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings based 

on our audit objectives.

In addition, we interviewed officials from 

Treasury’s Office of Financial Stability, Federal Reserve, Federal Reserve 

Bank of Chicago, FDIC, GM, and Ally Financial.

 3

See GAO, Financial Audit: Office of Financial Stability (Troubled Asset Relief Program) 

Fiscal Years 2012 and 2011 Financial Statements, GAO-13-126R (Washington, D.C.:

Nov. 9. 2012); Financial Audit: Office of Financial (Troubled Asset Relief Program) Fiscal 

Years 2011 and 2010 Financial Statements, GAO-12-169 (Washington, D.C.: Nov. 10, 

2011); Financial Audit: Office of Financial Stability (Troubled Asset Relief Program) Fiscal 

Years 2010 and 2009 Financial Statements, GAO-11-174 (Washington, D.C.: Nov. 15, 

2010); and Financial Audit: Office of Financial Stability (Troubled Asset Relief Program) 

Fiscal Year 2009 Financial Statements, GAO-10-301 (Washington, D.C.: Dec. 9, 2009).

4

Board of Governors of the Federal Reserve System, Dodd-Frank Act Stress Test 2013:

Supervisory Stress Test Methodology and Results, March 2013, and Board of Governors 

of the Federal Reserve System, Comprehensive Capital Analysis and Review 2013:

Assessment Framework and Results, March 2013.
Appendix II: Comments from the Department 

of the Treasury

Page 38 GAO-14-6 Troubled Asset Relief Program

Appendix II: Comments from the Department 

of the Treasury
Appendix II: Comments from the Department 

of the Treasury

Page 39 GAO-14-6 Troubled Asset Relief Program
Appendix III: GAO Contact and Staff 

Acknowledgments

Page 40 GAO-14-6 Troubled Asset Relief Program

A. Nicole Clowers, (202) 512-8678, clowersa@gao.gov

In addition to the individual named above, Raymond Sendejas (Assistant 

Director), Bethany Benitez, Emily Chalmers, Nancy Eibeck, Matthew 

Keeler, Risto Laboski, Sara Ann Moessbauer, Marc Molino, and Roberto 

Pinero made key contributions to this report.

Appendix III: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(250716)
The Government Accountability Office, the audit, evaluation, and 

investigative arm of Congress, exists to support Congress in meeting its 

constitutional responsibilities and to help improve the performance and 

accountability of the federal government for the American people. GAO 

examines the use of public funds; evaluates federal programs and 

policies; and provides analyses, recommendations, and other assistance 

to help Congress make informed oversight, policy, and funding decisions. 

GAO’s commitment to good government is reflected in its core values of 

accountability, integrity, and reliability.

The fastest and easiest way to obtain copies of GAO documents at no 

cost is through GAO’s website (http://www.gao.gov). Each weekday 

afternoon, GAO posts on its website newly released reports, testimony, 

and correspondence. To have GAO e-mail you a list of newly posted 

products, go to http://www.gao.gov and select “E-mail Updates.”

The price of each GAO publication reflects GAO’s actual cost of 

production and distribution and depends on the number of pages in the 

publication and whether the publication is printed in color or black and 

white. Pricing and ordering information is posted on GAO’s website, 

http://www.gao.gov/ordering.htm. 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or 

TDD (202) 512-2537.

Orders may be paid for using American Express, Discover Card, 

MasterCard, Visa, check, or money order. Call for additional information.

Connect with GAO on Facebook, Flickr, Twitter, and YouTube.

Subscribe to our RSS Feeds or E-mail Updates. Listen to our Podcasts.

Visit GAO on the web at www.gao.gov.

Contact:

Website: http://www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470

Katherine Siggerud, Managing Director, siggerudk@gao.gov, (202) 512-

4400, U.S. Government Accountability Office, 441 G Street NW, Room 

7125, Washington, DC 20548

Chuck Young, Managing Director, youngc1@gao.gov, (202) 512-4800

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, DC 20548

GAO’s Mission

Obtaining Copies of 

GAO Reports and 

Testimony

Order by Phone

Connect with GAO

To Report Fraud, 

Waste, and Abuse in 

Federal Programs

Congressional 

Relations

Public Affairs

Please Print on Recycled Paper.