Ally Bank 2014 Annual Report Download - page 14

Table of Contents
Ally Financial Inc. • Form 10-K
2
Certain Regulatory Matters
We are subject to various regulatory, financial, and other requirements of the jurisdictions in which our businesses operate. In light of
recent conditions in the global financial markets, regulators have increased their focus on the regulation of the financial services industry. As a
result, proposals for legislation or regulations that could increase the scope and nature of regulation of the financial services industry are
expected. The following is a description of some of the laws and regulations that currently affect our business.
Bank Holding Company and Financial Holding Company Status
Ally and IB Finance Holding Company, LLC (IB Finance) are currently both BHCs under the BHC Act. IB Finance is the direct holding
company for Ally's FDIC-insured depository institution, Ally Bank. As a BHC, Ally is subject to supervision, examination and regulation by
the Board of Governors of the Federal Reserve System (FRB). Ally must also comply with regulatory risk-based and leverage capital
requirements, as well as various safety and soundness standards imposed by the FRB, and is subject to certain statutory restrictions
concerning the types of assets or securities it may own and the activities in which it may engage. Ally Bank, our banking subsidiary, is
currently not a member of the Federal Reserve System and is subject to supervision, examination and regulation by the Federal Deposit
Insurance Corporation (FDIC) and the Utah Department of Financial Institutions (Utah DFI). This regulatory oversight focuses on the
protection of depositors, the FDIC's Deposit Insurance Fund, and the banking system as a whole, not security holders, and in some instances
may be contrary to their interests.
Our election to become a FHC under the BHC Act was approved by the FRB and became effective on December 20, 2013. To maintain
its status as a FHC, Ally and its bank subsidiary, Ally Bank, must remain “well-capitalized” and “well-managed,” as defined under applicable
law.
• Permitted Activities —The Gramm-Leach-Bliley Act of 1999 (GLB Act) amended the BHC Act by providing a new regulatory
framework applicable to “financial holding companies,” which are bank holding companies that meet certain qualifications and
elect FHC status. The FRB supervises, examines, and regulates FHCs, as it does all BHCs. However, insurance and securities
activities conducted by a FHC or its nonbank subsidiaries are regulated primarily by functional regulators. As a FHC, Ally is
permitted to engage in a broader range of financial and related activities than those that are permissible for BHCs, in particular,
securities, insurance, and merchant banking activities. Ally's status as a FHC allows us to continue all existing insurance activities,
as well as our SmartAuction vehicle remarketing services for third parties. Under the BHC Act, Ally generally may not, directly or
indirectly, acquire more than 5% of any class of voting shares of any nonaffiliated bank or BHC without first obtaining FRB
approval.
• Dodd-Frank Wall Street Reform and Consumer Protection Act — On July 21, 2010, the President of the United States signed into
law the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The Dodd-Frank Act represents a
significant overhaul of many aspects of the regulation of the financial services industry, addressing, among other things, systemic
risk, capital adequacy, deposit insurance assessments, consumer financial protection, derivatives, restrictions on an insured bank’s
transactions with its affiliates, lending limits, and mortgage-lending practices. When fully implemented, the Dodd-Frank Act will
have material implications for Ally and the entire financial services industry. Among other things, it will:
• result in Ally being subject to enhanced prudential standards, oversight, and scrutiny as a result of being a BHC with
$50 billion or more in total consolidated assets (large BHC);
• increase the levels of capital and liquidity with which Ally must operate and affect how it plans capital and liquidity
levels;
• subject Ally to new and/or higher fees paid to various regulatory entities, including but not limited to deposit insurance
fees paid by Ally Bank to the FDIC;
• potentially impact a number of Ally's business and risk management strategies;
• potentially restrict the revenue that Ally generates from certain businesses;
• require Ally to provide to the FRB and FDIC an annual plan for its rapid and orderly resolution in the event of material
financial distress;
• subject Ally to regulation by the Consumer Financial Protection Bureau (CFPB), which has very broad rule-making,
examination, and enforcement authorities; and
• subject derivatives that Ally enters into for hedging, risk management and other purposes to a comprehensive new
regulatory regime which, over time, will require central clearing and execution on designated markets or execution
facilities for certain standardized derivatives and impose margin, documentation, trade reporting, and other new
requirements.