Ally Bank 2014 Annual Report Download - page 22

Table of Contents
Ally Financial Inc. • Form 10-K
10
Our ability to rely on deposits as a part of our funding strategy may be limited.
Ally Bank continues to be a key part of our funding strategy, and we have continued to place greater reliance on deposits as a source of
funding through Ally Bank. Ally Bank does not have a retail branch network. It obtains its deposits through direct banking as well as brokered
deposits. Brokered deposits may be more price sensitive than other types of deposits and may become less available if alternative investments
offer higher interest rates. Brokered deposits totaled $9.9 billion at December 31, 2014, which represented 17% of Ally Bank total deposits.
Our ability to maintain our current level of deposits or grow our deposit base could be affected by regulatory restrictions including the
possible imposition of prior approval requirements, restrictions on deposit growth, or restrictions on our rates offered. In addition, perceptions
of our financial strength, rates offered by third parties, and other competitive factors beyond our control, including returns on alternative
investments, will also impact the size of our deposit base. In addition, our regulators may impose restrictions on our ability to fund certain
types of assets at Ally Bank, potentially raising the cost of funding those activities without the use of Ally Bank deposits. Qualitative and
quantitative liquidity requirements imposed by the U.S. banking regulators may also impact our funding strategy.
Financial services legislative and regulatory reforms may have a significant impact on our business and results of operations.
The Dodd-Frank Act, which became law in July 2010, has and will continue to substantially change the legal and regulatory framework
under which we operate. Certain portions of the Dodd-Frank Act were effective immediately, and others have become effective since
enactment, while others are subject to further rulemaking, transition periods, and the discretion of various regulatory bodies. The Dodd-Frank
Act, when fully implemented, will have material implications for Ally and the entire financial services industry. Among other things, it will:
• result in Ally being subject to enhanced 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 and any
other similar assessments 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 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.
While U.S. regulators have finalized many regulations to implement various provisions of the Dodd-Frank Act, they plan to propose or
finalize additional regulations for implementation in the future. In light of the further rulemaking required to fully implement the Dodd-Frank
Act, as well as the discretion afforded to federal regulators, the full impact of this legislation on Ally, its business strategies, and financial
performance cannot be known at this time and may not be known for a number of years. In addition, regulations may impact us differently in
comparison to other more established financial institutions. However, these impacts are expected to be substantial and some of them are likely
to adversely affect Ally and its financial performance. The extent to which Ally can adjust its strategies to offset such adverse impacts also is
not knowable at this time.
Future consumer legislation or actions could harm our competitive position.
In addition to the enactment of the Dodd-Frank Act, various legislative bodies have also recently been considering altering the existing
framework governing creditors’ rights, including legislation that would result in or allow loan modifications of various sorts. Such legislation
may change banking statutes and the operating environment in substantial and unpredictable ways. If enacted, such legislation could increase
the cost of doing business; limit or expand permissible activities; or affect the competitive balance among banks, savings associations, credit
unions, and other financial institutions. We cannot predict whether new legislation will be enacted, and if enacted, the effect that it or any
regulations would have on our activities, financial condition, or results of operations.