BOSTON — GMAC LLC and a bank lobby group are butting heads over the high interest rates GMAC's bank unit is paying for deposits, with bankers saying GMAC is unfairly subsidized by federal funds.

In the latest salvo, GMAC, the lender long affiliated with General Motors Corp. and now Chrysler LLC, said on Monday that a complaint made last week by the American Bankers Association was "highly inappropriate," and accused the lobby group of restraining competition among banks.

GMAC converted to a bank holding company last year as it accepted federal bailout funds and recently announced a new name for its online bank, Ally Bank.

Ally Bank is offering annual percentage yields of 2.8% on one-year federally insured certificates of deposit, according to its Web site. This is the highest rate on one-year CDs currently tracked by Bankrate.com and compares with an average annual percentage yield of 1.875%. ING Direct, a rival online bank, is offering yields on one-year CDs of 1.5%.

"Ally Bank is offering interest rates well above the market in order to attract" deposits, said the ABA in a May 27 letter to the Federal Deposit Insurance Corp. "This aggressive deposit strategy is particularly egregious when it is used by a troubled bank in which the government holds a controlling interest. Such a bank is significantly shielded from investor and market influences that might otherwise act as a brake on risky financial strategies."

Last month, the federal government, in a series of extraordinary steps, shored up GMAC's finances by as much as $15 billion, while leaving the door open for additional support. This amount equals roughly 70% of GMAC's $22 billion of total equity as of March 31.

These moves underscore how vital GMAC is to the Obama administration's efforts to revive the ailing U.S. auto industry. GMAC provides loans to auto dealers who use the funds to stockpile their inventory of new vehicles. GMAC also lends to consumers buying these vehicles.

GMAC suffered a net loss of $675 million in the first quarter, wider than a $589 million loss a year earlier.

The Treasury Department confirmed in May that it will inject $7.5 billion in GMAC, which needs to figure out by June 8 how it will fill an $11.5 billion equity hole. The Treasury investment includes $4 billion earmarked for loans to Chrysler LLC dealers and consumers. The remaining $3.5 billion will go to strengthen GMAC's capital position.

The Treasury also said it would swap $884 million of its existing preferred-stock investment for common stock, giving the government a 35.4% equity stake in the lender. This stake could increase to more than half if GMAC, amid potential mounting losses and meager capital levels, were to convert the government's investments into common equity.

"Ally Bank is committed to offering our customers value through competitive rates," says Gina Proia, a GMAC spokeswoman. "We can do this because we have an asset generation network that enables us to originate quality assets profitably at these deposit rates."

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