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AP Sources: Ally Selects IPO Underwriters

WASHINGTON (AP) - Ally Financial, the former General Motors finance arm that was bailed out by U.S. taxpayers, has selected four investment banks to handle an initial public stock offering, people familiar with the plans said Friday.

The stock sale will be led by Citigroup, Goldman Sachs, JPMorgan Chase and Morgan Stanley, according to those briefed on the matter. They spoke on condition of anonymity because they were not authorized to speak publicly about the plans.

The Treasury Department and Ally Financial, which was previously called GMAC, declined comment. The banks, which also served as underwriters in last year's GM IPO, either declined comment or did not immediately return messages.

The government owns 74 percent of Ally because of a $17.2 billion bailout during the financial crisis. The Treasury Department hopes to get back at least some of the taxpayers' money through a public stock sale. The planned IPO is the latest attempt by the government to recoup taxpayer money after rescuing companies in the financial sector and auto industry during the economic downturn.

General Motors sought bankruptcy protection in 2009 and received nearly $50 billion in government help. The Treasury Department sold a significant portion of its holdings in the new GM in an IPO last November. U.S. taxpayers still own 33 percent of GM.

Ally makes loans to GM customers and finances dealer inventories. The government first bailed out the company in late 2008 as part of the Bush administration's aid to the U.S. auto industry. The Obama administration provided additional funding in May and December 2009.

Last December, Treasury officials laid the groundwork for Ally's stock offering by converting about a third of its stake in the lender from preferred securities to common stock. The conversion, designed to make it easier for the government to sell its stake, raised Treasury's ownership from 56 percent to 74 percent.

Treasury officials said in January that Perella Weinberg Partners would advise it on the stock sale.

The Treasury Department has said Ally has made good progress in restructuring. But a congressional oversight panel last month criticized what it called Treasury's "hands off" approach toward Ally for not always asserting its influence on the timing of an eventual IPO.

The panel also noted that Treasury declined to block GM's purchase of Texas-based AmeriCredit, even though that finance firm may end up competing against Ally.