For the second time this week, a government watchdog is criticizing how the U.S. Department of the Treasury is dealing with companies that were bailed out following the 2008 crash.
In a new report issued by the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), the Treasury is faulted for not finding a speedy solution to the $11.4 billion owed to the government by Ally Financial. The government currently owns 74% of Ally, formerly known as GMAC, and the company has only repaid $5.8 billion of the $17.2 billion in aid that it has received.
‘Treasury placed no requirements on GMAC to plan to resolve its subprime mortgage liabilities and losses, which have become a millstone around taxpayers' necks,’ says Christy Romero, special inspector general for TARP.
For its part, both Ally and the Treasury disputed SIGTARP's findings.
‘Ally is highly confident in its ability to repay the remaining U.S. Treasury investment in full,’ said Gina Proia, an Ally spokesperson, in a Washington Post interview. ‘We have taken a number of steps in 2012 designed to best position the company to exit TARP, and there has been significant progress thus far.’
Timothy G. Massad, the Treasury's assistant secretary for financial stability, adds that Ally's recovery was delayed due to the May 2012 bankruptcy of its ResCap unit and the subsequent sale of the ResCap assets.