Established Banks Give GMAC's Ally Bank the Cold Shoulder

(MoneyWatch)  Ally Bank, the newly launched retail banking operation for GMAC Financial Services, has already managed to make enemies in the banking world.

GMAC is the former captive finance company for General Motors. GMAC converted itself to a bank holding company late last year, as part of a restructuring to win a bailout from the U.S. Treasury Department.

GMAC already had a small retail banking operation, but on May 15, GMAC launched a much higher-profile online bank aimed at consumers called Ally Bank, based in Charlotte, N.C.

In late May, the Washington-based American Bankers Association complained to the FDIC that Ally Bank isn't playing fair by paying above-market rates on CDs and savings accounts.

"ABA believes it is completely inappropriate, and indeed risky, for GMAC/Ally Bank to be allowed by the regulators to continue to pay rates well above the market," ABA President and CEO Ed Yingling said in a statement posted in an ABA newsletter.

He said that Ally Bank shouldn't be allowed to pay such high rates because GMAC is losing money. He said under the circumstances it's "risky" for Ally to pay among the highest rates in the country, and that normally, federal regulators wouldn't allow other banks to do the same thing.

Yingling also hinted that Ally also has an unfair advantage because of $13.5 billion in government assistance GMAC has received from the U.S. Treasury Department.

GMAC CEO Al de Molina fired back in an open letter to Yingling on June 1, defending Ally's practices as consumer-friendly, and maintaining that GMAC is well capitalized.

He said in the letter ABA members could be "troubled" because Ally Bank has said it will bring a new level of transparency to retail banking.

Ally Bank is offering 2.25 percent on savings accounts. According to bankrate.com, the average rate for a group of 61 U.S. banks is 1.42 percent.

According to the ABA, GMAC/Ally's deposits rose from $1.2 billion to $22.5 billion over the past four years.