Ally Financial logoBack when Ally Financial was known as GMAC Financial, the U.S. Treasury gave it $17.2 billion in TARP funds to weather the global economic crisis. GMAC is now Ally Financial, and although it has repaid $5.4 billion of what it was loaned, there doesn't seem to be a clear path for repaying the outstanding amount. Bloomberg reports that Ally's mortgage unit, Residential Captial (ResCap), is teetering on the ledge of bankrupcty, and its banking operations didn't perform well in the Federal Reserve's stress tests that assess a bank's health.

An IPO for the entire company faces dim prospects (one was rumored back in April of 2011), so in a private equity ploy, the Treasury would like Ally to divvy itself up and sell the pieces to unlock value. Estimates are that the pieces could fetch $23.1 to $28.6 billion. The plan is supported by Elliott Management Corp, a shareholder that holds 2.3 percent of Ally stock. However, Ally's CEO and its board don't want to break the company up, and the Treasury – which holds 74 percent – doesn't want to lean on the leadership too hard for fear of "appearing as a heavy-handed owner."

In addition, the looming bankruptcy of ResCap will have an unknown effect on Ally's ability to do anything. Before the mortgage implosion, GMAC's auto unit was struggling and ResCap was restructured as a separate entity so that it wouldn't be dragged down by the captive finance department. The situation is reversed now, with ResCap in trouble and the captive finance arm supporting itself, but Elliot feels that the restructuring won't be enough to shield Ally from perhaps 18 months of litigation and billions in claims.

Ally execs feel differently, but no one will know until the trigger is pulled and the courts weigh in. With the Treasury reluctant to compel a move, it could be some time before it sees its $11.8 billion again.