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WASHINGTON, D.C. — Ally Financial currently holds the No. 1
position for vehicle lending, but a federal inspector believes the U.S.
Treasury needs to sell off its ownership stake in the captive finance company.

In testimony this week to the U.S. House Subcommittee on
TARP, Financial Services and Bailouts of Public and Private Programs, a part of
the Committee on Oversight And Government Reform, Christy Romero told lawmakers,
"Treasury should develop a concrete exit plan" to not only divest ownership in
Ally, but General Motors as well.

Romero, who is the special inspector general for the Office
of the Special Inspector General for the Troubled Asset Relief Program
(SIGTARP), wrapped up extended committee testimony by acknowledging how it is
unclear how much taxpayers will recover from its TARP investments in GM and
Ally Financial.

Romero's concerns stem from the fact that Ally has not
conducted its initial public offering despite filing its S-1 registration statement
with the Securities and Exchange Commission last March.

Those concerns intensified this past May when Ally announced
that its mortgage subsidiary, Residential Capital and certain subsidiaries filed for Chapter 11 bankruptcy

"On a Treasury blog posting on May 14, the day of ResCap's
bankruptcy filing, Treasury Assistant Secretary Tim Massad said that Ally
Financial, Treasury and many independent analysts believed that it was possible
to proceed with an initial public offering of Ally, which would have enabled
Treasury to begin exiting its common equity investment," Romero told the
committee.

"However, Ally was forced to delay the IPO due to
intensifying issues related to ResCap's legacy mortgage liabilities — old loans
made during the days before the housing bubble burst — and a general weakening
in the IPO market," she continued.

"As with all of our investments, our objective today is to
exit in a manner that balances speed of recovery with maximizing returns for
taxpayers," Romero went on to testify. "We believe that by addressing the
legacy mortgage liabilities at ResCap, the action taken today will put
taxpayers in a stronger position to maximize the value of their remaining
investment in Ally.

Romero indicated that SIGTARP will be monitoring Treasury's
progress in the weeks and months ahead, but market conditions have slowed
Treasury's progress.

"In addition, due to the enormity of Treasury's stake, it
could take a number of years for Treasury to sell at or above break-even," Romero
acknowledged in testimony.

"According to the Congressional Oversight Panel, the GM IPO was the largest IPO
in U.S. history, and Treasury holds more GM shares than it sold in that IPO.
Even if Treasury were able to sell a significant amount of its Ally stock in an
IPO, as reported by COP, Treasury expects that it is likely to take one
to two years following the IPO to dispose completely of Treasury's ownership
stake.

"Both COP and GAO have suggested that Treasury decide
whether it should sell its stock below the break-even price. Although that
would result in taxpayers getting out of these investments more quickly, it would
decrease taxpayer return," she projected.

Romero's complete testimony can be found here.

Ally's Recent Performance and Market Position

Ally's total first-quarter U.S. auto originations settled at
$9.7 billion, up from the fourth-quarter amount of $9.2 billion. However, the
figure was off from the year-ago total of $11.6 billion.

"Consumer financing origination levels in the first quarter
of 2011 were driven by a significant increase in automaker incentive programs
during that period," Ally pointed out.

Ally's loan business associated with used vehicles moved
higher quarter-over-quarter, as well, ticking up to $2.6 billion from $2.3
billion.

Fueling those quarter-over-quarter loan rises was a jump of
39,000 extra contracts as Ally reported 376,000 total contracts originated
during the first quarter. The company indicated 59 percent of those loans
coming out of General Motors dealers were subvented, the highest level dating
back a year. Ally noted 48 percent of loans originating at Chrysler dealers
were subvented, an amount flat from the previous quarter.

The activity left Ally holding 6.39 percent of the vehicle
financing market at the end of Q1, according to Experian Automotive. The next
closest lender in Experian's data was Wells Fargo with 5.71 percent.