GMAC/Ally Retreats in Deposit Battle with ABA

  • JJ Hornblass
  • June 5, 2009
  • 1

Earlier this week a battle of letters sparked up between GMAC/Ally Bank and the American Bankers Association over what the ABA called GMAC’s “particularly egregious” and too-high deposit rates.

To sum it up, the ABA told the FDIC that since GMAC is in less-than-sound financial shape, it should not be permitted to buy marketshare with high deposit rates. GMAC, not surprisingly, disagreed with the ABA.

Well, it seems that GMAC has retreated somewhat from its battle position. The Bank Deals blog is reporting today that GMAC/Ally has quietly cut its deposit rates. Here’s a table that shows GMAC/Ally’s new pricing:

Will the ABA be satisfied with these rate cuts? Bank Deals says probably not:

I doubt these new rate cuts are low enough to satisfy the American Bankers Association (ABA). They probably would like to see rates as low as the Weekly National Rates and Rate Caps that the FDIC now publishes. That table shows the national average savings account rate of only 0.22%. As I mentioned [previously], the FDIC’s new rules to restrict deposit rates of banks that are not well capitalized won’t go into effect until 2010.

I have no reason to disagree.

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JJ started the first iteration of Bank Innovation back in 2007, and has been working on it ever since. He also serves as President & Chief Executive Officer of Royal Media, Bank Innovation’s parent. He founded Royal in 1995 and oversees all aspects of the New York-based diversified media company. Prior to forming Royal, JJ was on the editorial staff of American Banker, the daily newspaper, and worked as an editor of a business magazine in Hong Kong. As a reporter and editor, he has won journalism awards from the National Press Foundation, Newsletter & Electronic Publishers Foundation, and the Reader’s Digest Foundation. He has a BS in Economics from Yeshiva University and a Master’s from the Columbia University Graduate School of Journalism. He was also a Fellow at the University of Wisconsin-Madison Graduate School of Banking. He lives in New York City with his wife, two daughters, and son. He counts among his accomplishments one New York City Marathon, two New York City Triathlons and the 2010 Father’s Day 5K, the first race he ever ran with his daughters. He can be reached at hornblass@gmail.com or 212-564-8972.

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One thought on “GMAC/Ally Retreats in Deposit Battle with ABA

  1. Stephen, thanks for the comment. You are right. AIG Bank is paying 2.19%, which is 25 basis points above the FDIC cap (which do not go into effect until yearend). If ever there was a financial institution that should be forced to reign in its risk it is AIG Bank. Someone forward this to Sheila Bair.

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