Ally Financial reports Second-Quarter Loss on Costs Of ResCap Bankruptcy image

Ally Financial Inc. (Ally) the U.S.- controlled lender whose mortgage subsidiary went bankrupt, today reported a net loss of $898 million for the second quarter of 2012, compared to net income of $310 million in the prior quarter and net income of $113 million for the second quarter of 2011.

Results for the quarter were adversely affected by a $1.2 billion charge resulting from Residential Capital, LLC, and certain of its subsidiaries (ResCap) filing for Chapter 11 bankruptcy protection on May 14 and a proposed settlement between ResCap and Ally.

Ally, known as GMAC when it was part of General Motors Corp., led financing of U.S. consumerauto sales for 2011 with more than $40 billion in contracts for new or used cars and trucks, or about 1.5 million vehicles, according to the lender.

Ally, took more than $17 billion in bailout funds during the financial crisis as losses from its foray into subprime mortgages mounted and is 74% owned by the U.S. government.

Now, Chief Executive Officer Michael Carpenter is searching for ways to repay U.S. bailouts that left the Treasury Department with a 74 percent stake.