You can't miss the> print ads for Ally Bank posted all over Chicago streets, almost laughable deceptions aimed at covering up the outfit's failed history and ongoing government ownership.
"We don't take money. We take care of it," boasts one ad, more than a little ironic considering the bank is 73.8% owned by the Federal Government. They don't take money? Maybe not from customers, but from taxpayers they've taken billions.
For a company that received numerous bailouts exceeding $17 billion dollars in total, it takes chutzpah to run ads promising to "treat your money like it's actually yours." Actually, given the fact we are all involuntary investors in Ally, they treat our money like it's theirs. That's an injustice only the government, not any profit-seeking businessman, can commit.
Ally Bank spokeswoman Gina Proia disagrees. "The premise of the bank is to offer the customer a superior value proposition based on features and services and part of that is not charging maintenance fees. The advertisement is related to fees which are charged by many in the industry, not the bank itself."
When we last wrote about Ally, we noted how the company promised it "won't deal in half-truths, kindatruths, or truths only buried in fine print. That's because we don't have anything to hide. We're always going to give it to you straight."
Two years later, Ally continues to promote honesty and straight talk while still on the taxpayers' dime.
Just like Treasury Secretary Tim Geithner, who calls those not paying their mortgages "responsible homeowners" or President Obama, whose administration adamantly holds forth that "gamblers playing with other people's money" caused the economic collapse, the ads require a willing suspension of objective reality.
Truth be told, Ally is not so folksy and inculpable; just like General Motors (GM),
Proia points to the company's recent repayment of trust-preferred securities as a positive sign. "We've paid $2.2 billion in dividends to Treasury and $2.7 billion on the investment thus far and are absolutely focused on paying back the rest as soon as possible."
Recently the government has moved to float Ally Bank public via an IPO, a move which would likely only partially privatize the company in a similar fashion to GM; in which taxpayers still own a significant stake -- even more so now that the stock recently hit a new all-time low. Ally funds 80% of GM dealers and half its customers, and GM's recent lifetime low doesn't bode well for Ally's potential valuation. I continue to believe the automaker remains a short-sale at current levels and hold the position.
Given my industry isn't even permitted to advertise, it's not just the losses which bother me, but the company's unabashedly brazen declaration of their fiduciary prudence and high moral standing. From the bailed-out firm that still owes taxpayers $17 billion dollars? Don't make me laugh.
Jonathan Hoenig is managing member at Capitalistpig Hedge Fund LLC . At the time of writing, Hoenig's Fund held positions in many of the securities mentioned.