Ally Bank responds to FDIC, lowers rates

Well the ABA lobbied and whined and cried to the FDIC…and they won.  Ally Bank has lowered it controversial high rates down from 2.25% a week ago to 2.05% on their online savings accounts. 

Ally is still fighting the questioning of their rates and their business model and is requesting help for its customers.  You can voice your opinion here and help Ally provide its customers with the best rates possible.

Sample of repsonses at Ally:

Under no circumstances should Ally Bank’s great rates be lowered to satisfy the whims of the ABA. Competition is what made our country great. Let the ABA "banks" keep their low rates and see how many clients they dupe into accepting rates so low as to be laughable.. I am glad to have accounts with Ally Bank and am outraged that any group would seek to crimp and curtain Ally’s customer friendly rates and policies.

Please stop lobbying against more competitive rates. ABA should encourage more healthy competition that benefits both the consumer and banks.

With the economy down turn, people realized they need to save some money for the rainy days. When they need money the most, their 401K or IRA shrank 40-60%, and the interest rate is already low. By limit the max interest rate the bank can offer, it makes things worse for people. Especially for people who are close to or in the retirement.

It is supposed to be a free market. What ABA is doing is taking away part of that freedom by impose a max interest rate and forcing all banks to go below that, and taking away competitions.

From CNN:

Ally Bank, a lending arm of struggling car-and-house financier GMAC, has cut the rates it offers depositors after a friendly chat with regulators.

The Utah-based bank trimmed the rate it offers on a one-year certificate of deposit to 2.49% from 2.8% in the past week.

The move came after the Federal Deposit Insurance Corp. sent Ally a letter reminding it of a commitment it made last month to reduce the cost of gathering deposits.

The bank’s practice of offering above-market rates with the aid of federal funding — GMAC has taken in some $21 billion in government capital and loan guarantees, and will soon list the government as its biggest shareholder — recently drew the ire of the chief bank trade group, the American Bankers Association.

Ally Bank’s total deposits rose 46% from a year ago in the first quarter, to $22.5 billion, as the bank offered certificate of deposit rates well above the national average.

The ABA urged the FDIC to crack down on what it deemed these "risky" deposit-gathering practices. The bankers questioned Ally’s financial health, noting that it lost $133 million in the first quarter, while arguing that Ally’s efforts to draw deposits endanger the health of the industry-funded FDIC deposit insurance fund.

GMAC lending arm Ally Bank responds to FDIC and cuts rates – Jun. 11, 2009