Report: Ally Cutting Jobs and Ending Mortgage Originations

Company Strategy and Workforce Adjustments - Ally Financial is cutting less than 5% of its workforce as part of a strategy to "right-size" the company, with layoffs not confined to one area or location [1] - The company is ending mortgage originations during the current quarter and rethinking its credit card business [1][2] - Despite workforce reductions, the company continues to hire in other areas of its business [1] Financial Performance and Credit Challenges - Ally Financial has reported worsening credit challenges across its business units, including auto-lending, due to higher interest rates increasing the cost of debt for consumers [2] - The company's shares plunged by double digits in September, driven by borrower struggles with high inflation, cost of living, and a weakening employment picture, leading to increased delinquencies and charge-offs [3] - CEO Michael Rhodes warned of "choppy" performance in the next few quarters during an October earnings call [4] Underwriting and Risk Management - Ally Financial has implemented stricter verification requirements for income and employment to impose tougher standards for borrowers [4] - The company is focusing on prioritizing risk-adjusted returns over origination volume, with a significant improvement in borrower credit quality since early 2023 [5] Industry Trends and Consumer Credit - Federal Reserve data shows that US credit card debt increased from $5.093 trillion in September to$5.113 trillion in October, with consumer credit growing at a 4.5% annual rate in October, up from 0.8% the previous month [5] - The Federal Reserve Bank of New York's Credit Access Survey revealed rising rejection rates for credit cards, mortgages, auto loans, and refinance applications in 2024, indicating greater difficulty for consumers to access credit [6]