Ally Bank: Is It a Good Fit?

Anyone who listens to NPR and to its Planet Money podcasts, in particular, has by now heard the familiar Ally Bank funding credit or seen the bank's ad on npr.org.

"Ally Bank, committed to straightforward banking, including customer service with a real human being 24/7," is one of two credits that have rotated through NPR's radio programs and web site since May.

What you might not know is that Ally Bank is the rebranded banking arm of the General Motors Acceptance Corp., which has received $12.5 billion in federal bailout money. In May, the GMAC bank officially changed its name to Ally Bank; it operates only on the Internet.

Ally is also the exclusive sponsor of Planet Money, a three-times-a-week popular podcast and weekday blog that NPR started in August 2008 to cover the global economy — just before the financial crisis went into overdrive.

Planet Money also does weekly radio stories for Morning Edition and All Things Considered. Each time a Planet Money story runs, an Ally Bank credit directly follows — which is not a common practice with sponsors, especially for news stories.

At least three questions arise from the Ally Bank sponsorships: Should NPR solicit funding from a financial services business for a program specifically aimed at covering the economy? Should NPR occasionally disclose that Ally Bank is the rebranded GMAC? Has NPR given Ally Bank more favorable coverage than it might have gotten otherwise?

"It's reasonable to accept that news organizations are more aggressive in going after more and different forms of financial support," said Bob Steele, an ethics expert at the Poynter Institute, a journalistic think tank in St. Petersburg, FL. "It would be inappropriate to seek and accept certain kind of funding which could undermine the journalistic integrity, no matter how good that money might seem to be. In this case, it raises the question of whether this particular bank is getting a special deal for whatever reason."

Based on the letters and comments I have received, it is clear that some listeners perceive a conflict of interest for NPR. Cynical listeners are bound to wonder if NPR might go easy on news coverage of Ally.

"I have a real problem with hearing the sponsor messages recently appearing on NPR programs funded by Ally Bank," wrote Steve King of Rocky Mount, Va. "This is GMAC with a new name, after receiving $21 billion in bailout money, and they are now gaming the FDIC and bank regulatory system by offering CD's at way above market rates. The American Bankers Association is on record complaining about Ally Bank. I don't think you should be accepting their money."

King isn't quite right about the $21 billion (so far they've gotten $12.5 billion.) But in October GMAC asked the government for a third bailout — and Planet Money covered that story.

"I have nothing to do with the underwriting stuff," said Planet Money correspondent Adam Davidson in September. "We don't pay any attention to the fact that they are a sponsor. We wouldn't for a second give them any special treatment — positive or negative. I feel absolutely confident if we wanted to do a story on Ally, we absolutely would."

And they did a blog post and podcast on Oct. 28. Planet Money podcast reporters Alex Blumberg and Chana Joffe-Walt did a piece on the third bailout request that focused on something called "Resurrection Risk-Taking," i.e. the tendency of some banks to take bigger risks to make more money. [That's the only story Planet Money has done on Ally.]

The reporters noted that Ally was offering 2 (today it's 1.5) percent interest for its no-penalty Certificates of Deposit, while Wells Fargo was offering 0.5 percent. "The rates of their CDs are among the highest rates anywhere," noted Joffe-Walt.

Planet Money quoted Paul Merski, senior vice president for Independent Community Bankers of America, saying, "They are offering those rates because they got exceptional assistance, and now they are going to ask for a third round of assistance." The implication was that Ally could be taking risks (i.e., offering extra-high interest rates) because it had a backstop in the form of federal bailout money.

Did Ally have any preconceived ideas when it agreed to sponsor Planet Money for a year? Were they angry that the Planet Money piece raised questions about the bank?

"I certainly wouldn't make a judgment call as to whether they were going hard on us to prove their independence," said Gina Proia, GMAC's spokeswoman. "We fully respect the distinction between advertising and editorial. We did have an opportunity to talk with the reporter about our perspective and it was reflected in part. Not in full. We thought the 'Resurrection Risk-Taking,' in addition to being false, is inflammatory."

Ally's relationship with NPR is a new one in an era when NPR, like other news organizations, is finding it necessary to search for new revenue streams. At NPR, sponsor credits typically run at a segment's end on a radio show, with two or more credits lumped together.

But in Ally's case, the credit always comes right after a Planet Money story on Morning Edition or All Things Considered or at the beginning of a Planet Money podcast. Each Ally Bank credit thus stands out because it is the only one listeners hear at that point.

NPR calls this arrangement a "special series adjacency." It's been more commonly used with Story Corps., Hidden Kitchens, This I Believe and Radio Expeditions, said Blake Truitt, senior v.p., corporate sponsorship. "Planet Money is a special series, and Ally Bank is the sponsor of that series so they get an announcement adjacent to that story," said Truitt.

Ally's exclusive contract initially ran from May to December, but the bank re-upped and will be sponsoring Planet Money through December 2010.

According to Ellen Weiss, senior vice president for news, NPR has been feeling its way with adjacency credits. "We are trying to deal with changes in the sponsorship market and what sponsors are looking for," she said. "But we also want to make sure it's not cluttered. We don't want every piece sponsored. To be honest, for sponsors, it becomes a lot more valuable if they are not part of a group of credits."

Weiss said that Ally Bank "is a bit of a test case. I haven't seen yet with [Ally] a kind of response that makes me profoundly worried about NPR's reputation."

She says the "firewall" — which keeps advertisers from influencing content — is the same with Ally as for any other sponsor. "I've been here 27 years and I've never had anybody tell me I could or couldn't do a story based on a sponsor," said Weiss. "The main reason I feel we can test the waters is because we have 35 years of credibility."

As news organizations like NPR fight for financial security, any new or special funding arrangements need close examination — which Weiss says was done in this case. "We sort of went through what's our discomfort level," she said. "And how does the audience perceive this and what connections do they make. It's a good thing that people trust us. It's something I don't take lightly."

Transparency is also key. When Planet Money did the "Resurrection risk-taking" story on GMAC in late October, the show noted that its subsidiary, Ally Bank, was a major funder.

NPR's arrangement with Ally Bank is unique but may not remain so. The company currently is looking for a similar sponsorship for its "tech" segments, for example the weekly "All Tech Considered" segment. But Weiss said the company is committed to the segment, regardless of whether an exclusive sponsor is found.

The key to these future relationships is to make sure there are serious and rigorous discussions, at the outset, about the implications for NPR's journalistic credibility — and to continually examine the assumptions as time goes by.

Weiss is correct that NPR has a large pool of credibility with most of its audience. But that pool is not infinite, and it can be diminished when listeners perceive a conflict of interest, even if one does not exist.