Ally Bank Pressured to Cut Savings Rates

Ally Bank, formerly known as GMAC Bank, is facing pressure from regulators and the banking industry to cut rates on deposits.

Ally Bank was paying competitive interest rates on savings and CDs - nothing in the stratosphere for online banks, but competitive nonetheless. Regulators recently proposed rules that restrict troubled banks from paying excessively high rates on deposit accounts as a tactic to gain deposits. Apparently the FDIC and the American Bankers Association (ABA) think Ally Bank may be doing just that.

The ABA wrote a letter to the FDIC asking for more scrutiny of Ally Bank, and it appears that the FDIC is starting to apply pressure.

I don't know the details of Ally Bank's strength, nor of their battle with the ABA, so I don't know if the action is fair or not. I suspect we won't know everything until long after the fighting ends.

Further reading:

• How FDIC Insurance Works
• Ally Bank Responds