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FDIC Starts to Crack Down on Ally Bank's Deposit Rates
POSTED
ON BY Ken Tumin
GMAC filed a Form 8-K with the SEC stating that it was notified by the FDIC on June 4th of various new requirements. Here's the link to the 8-K on the SEC's website. It appears that the FDIC will limit the guaranteed debt that GMAC can issue via the Temporary Liquidity Guarantee Program (TLGP) based on Ally Bank's deposit rates. Here are excerpts of the 8-K:
This doesn't look good for Ally Bank and depositors like us who depend on their competitive deposit rates. It didn't take long for the FDIC to acquiesce to the American Bankers Association's pressures (see post). Ally Bank did some major rate cuts last Friday. I wonder if we'll see even more tomorrow.
Update 3:00pm PDT: CNN just published an article on this issue. Here's an excerpt which explains the pressure GMAC is under:
Update 6/19/09: New York Times commentary on this issue.
Voice Your Concerns: Ally Bank has a special page where you can read the ABA letter and the response of GMAC's CEO. There's also a contact form that allows you to voice your concerns to the ABA. In addition, if you want to give your opinions to the FDIC on this issue, I included contact information in my ABA-letter post.
Other recent posts related to this issue:
Thanks to the reader Tuphat who mentioned this news in the Daily News & Deals Page.
As indicated in the attached correspondence, requests by GMAC for further issuances of debt that is guaranteed by the FDIC pursuant to the TLGP will be administered by the FDIC according to the following plan: (1) GMAC's access to the TLGP will be phased in over time in specific increments; (2) the FDIC will inform GMAC of the amount of guaranteed debt available to be issued upon receiving a request from GMAC; and (3) the FDIC will require certain information from Ally Bank (a wholly-owned subsidiary of GMAC) to be considered in the decision made pursuant to item (2) above, which includes (a) a detailed list of Ally Bank's deposit products updated as products are added to or deleted from the list; (b) Ally Bank's ranking among the top ten deposit-rate payers and the methodology used to determine its ranking each week during any period in which TLGP debt of Ally Bank or GMAC is outstanding; and (c) the number of basis points the interest rate paid on certificate of deposit products and other deposit products exceeds the average rates for such products listed on Bankrate.com.
This doesn't look good for Ally Bank and depositors like us who depend on their competitive deposit rates. It didn't take long for the FDIC to acquiesce to the American Bankers Association's pressures (see post). Ally Bank did some major rate cuts last Friday. I wonder if we'll see even more tomorrow.
Update 3:00pm PDT: CNN just published an article on this issue. Here's an excerpt which explains the pressure GMAC is under:
The letter requires Ally to report to the agency [FDIC] on its deposit rates and how they compare with other banks whenever it seeks to tap funds under a federal debt guarantee program.
Update 6/19/09: New York Times commentary on this issue.
Voice Your Concerns: Ally Bank has a special page where you can read the ABA letter and the response of GMAC's CEO. There's also a contact form that allows you to voice your concerns to the ABA. In addition, if you want to give your opinions to the FDIC on this issue, I included contact information in my ABA-letter post.
Other recent posts related to this issue:
- FDIC's Weekly National Rates and Rate Caps
- Did ebank cut rates to comply with the FDIC's rate caps?
- Rate Cuts at Ally Bank
- ABA's Letter and How to Voice Your Concerns
Thanks to the reader Tuphat who mentioned this news in the Daily News & Deals Page.
I sent several e-mails, nobody responded back.
It seams, FDIC could care less about our input or concerns. They are under control of the FEDs and the ABA complaint was just a cover up to limit the interest rate agenda dictated by Ben Bernanke.
Ally is just a scape goat for FDIC strong arm rules and will spread to other banks when Ally will be punished by FDIC.
As always, people loose when it comes to deal with Washington bureaucrats.
Our concerns will wind up in the trash can.
Your statement about CD interest rate may be true, however, FDIC may bring special rule that can be retroactive to existing CD accounts for failure to comply or simply Ally will close those account.
CD contracts are revocable by the bank at any time, it is written in the fine print when the accounts are open and no reason is needed for such action.
I appreciate you thoughtfulness in addressing the issue. Discussion, especially among those who feel they have no power, has always been an important component of change.
Forget about voting for change. People have memory loss around election time and vote too many incumbents back in office over and over again.
Locked in CD rates CAN NOT BE CHANGED.
In the Deposit agreements CONTRACT book in states nowhere that cd rates may be changed by the issuing bank, or the FDIC. If they do, legal action by the owner of the account is possible.
In that regard, THEY are breaking the contract.
FDIC BEWARE!
How is this different then what ALLY bank is offering????
They are 6th on bankrates list.
They also have 3 stars.
Why are they picking on ALLY????
re anon 9:05 My theory is that if banks did not have saver's money, banks would borrow from the government at low rates. Capital requirements would be lowered if it came to that. Not that it would. People will keep putting money into banks until they start charging them to do so. Safer than a mattress or investing.
Just my opinion.
No jobs = No income = No borrowing = Tough times for all!