Ally Financial was one of four banks that failed the latest round of bank stress tests. The Federal Reserve announced the results of the stress test on Tuesday. 19 complex bank holding companies were evaluated by the stress test. Ally was one of four that failed. The other three are Citigroup, SunTrust and MetLife. According to AP via the Daily Herald:
Ally Financial Inc., the former GMAC Bank, was the worst performing bank in the Fed’s test. The U.S. Treasury still owns 74 percent of the bank. Ally protested the Fed’s stress tests, saying that the analysis overstated the potential mortgage risk in its portfolios.
You can read Ally's response to the stress test in this press release.
So how might this affect Ally Bank customers. This Reuters article looked into the question and had this to say:
The stress tests over the past several years have prompted regulators to require higher levels of capital from banks, and there are a multitude of ways banks can build capital cushions, such as shedding non-core assets, or boosting earnings through things like additional fee income.
Since Ally Bank's main marketing emphasis is the lack of fees, I don't seem them raising fees. One possibility that I think is more likely is Ally Financial selling Ally Bank. In February, Reuters reported:
Ally Financial is weighing a sale of all or part of its auto lending and banking businesses as an initial public offering looks increasingly remote and the U.S. government seeks to recoup some $17 billion in bailout money, sources familiar with the situation said.
It would be worrisome if some megabank acquired Ally Bank.
If Ally Bank stays with Ally Financial, Ally Bank customers may not see any direct consequence of this stress test failure. There may be some indirect consequences. With Ally continuing to be primarily owned by the government, Ally Bank may still be required to meet the FDIC rate restrictions. In 2009 the WSJ reported that the FDIC was requiring Ally Bank to keep deposit rates low enough so the bank wasn't one of the top 5 rate payers as measured by Bankrate.com. If you have followed Ally rates over the years, you probably have noticed that they have never been on top, but they have always been competitive.
As with any bank, it's always best to remain under the FDIC coverage limits. Ally Bank makes it easy to add POD or ITF beneficiaries to your accounts which can allow you to go above the standard $250K limit. If you are depending on beneficiaries to extend your FDIC coverage, it's important that the bank sets the POD up correctly. One FDIC requirement is that POD or ITF specification is in the account title. When you’re logged into your Ally Bank account, you can view the details of each account in a separate page. That page has an account title field. In my experience with Ally, your beneficiaries won’t be listed by default in this account title field. If you call or use the secure email, Ally can have your beneficiaries listed in the account title field with the POD or ITF designation.
I have more details of Ally Bank, beneficiaries and FDIC coverage in my post Maximizing Your FDIC Coverage with Beneficiaries.