The U.S. Treasury Department, which put $17.2 billion into a bailout of Ally Financial Inc., would prefer a breakup and sale of the lender because an initial public offering may not succeed, according to people familiar with the matter.

Treasury officials are telling Ally executives, directors and financial advisers that an IPO is unlikely soon because of the company’s high cost of capital relative to other banks, the potential bankruptcy of a mortgage unit, and its recent performance in Federal Reserve stress tests, said the people, who asked not to be identified because the talks are private.

The Treasury instead is pushing for Ally to split into at least two pieces, the people said. One part would be Ally’s auto-finance unit, one of the largest in the U.S., and the other would be its online bank, which had almost $28 billion in retail deposits at year-end. Investor Elliott Management Corp. also recommends a sale, according to a letter sent to the board by Elliott and obtained by Bloomberg News.

“Treasury has a lot of influence here,” said Adam Steer, an analyst at Brookfield Investment Management Inc., whose parent Brookfield Asset Management Inc. oversees about $150 billion in assets. “If you are going to repay the government as soon as possible and you can’t IPO it, how else would you pay them? A sale certainly makes sense.”

Ally Chief Executive Officer Michael Carpenter, 65, and its board have resisted the Treasury’s call for a split, the people said, adding that the department is reluctant to press Carpenter too hard for a sale out of concern about appearing as a heavy- handed owner. The Treasury owns 74 percent of Ally, the Detroit- based former finance arm of General Motors Corp.

“We’re supportive of management and continue to work closely with them,” the Treasury said in an e-mailed statement. Matt Anderson, a department spokesman, declined to comment on Treasury’s view of the IPO or the success of any potential sale.

“Every action the company has taken and contemplated has been with the objective to fulfill our mission to support the auto recovery and fully repay the taxpayer’s investment,” Gina Proia, an Ally spokeswoman, said in an e-mailed statement. “This is what will guide our decisions going forward.”

While no official Ally sales process has begun, the Treasury Department’s views have been shared with Ally senior executives, directors and a number of the financial and legal advisers brought on to help pursue an IPO, the people said.

The Fed’s stress tests released March 13 found Ally had some of the smallest capital cushions against losses among 19 of the largest U.S. lenders.

Ally probably will put the Residential Capital mortgage unit into bankruptcy in the next few weeks and sell some assets in a court-supervised sale, people familiar with the matter said last month. The firm also may lose its preferred lender status with automaker Chrysler Group LLC, which is seeking banks like Wells Fargo & Co. and Santander Holdings USA Inc. to potentially replace Ally, people with knowledge of the matter said last month.

Credit-default swaps on Minneapolis-based ResCap fell 4 percentage points to 67 percent upfront at 12:16 p.m. in New York today, according to data provider CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market. Investors use credit-default swaps to hedge against losses on corporate debt or to speculate on creditworthiness.

The Treasury has suggested Ally consider selling its captive-finance business to GM, said two of these people, with the rest sold to a traditional bank. GM and other companies aren’t interested in buying any of Ally until it resolves ResCap’s status, said another person familiar with the matter.

Jim Cain, a spokesman for Detroit-based GM, declined to comment.

The U.S. determined that Ally, formerly known as GMAC, was crucial to the survival of the auto industry during the financial crisis in 2008 and 2009 and provided multiple bailouts in return for a 74 percent stake.

Last year, when Ally was close to a public offering, it considered a joint bid from GM and Toronto-Dominion Bank, Canada’s second-largest lender, until those discussions fizzled, a person familiar with the matter said last month.

Ally has financed about 6.7 million GM or Chrysler vehicles for dealers since 2009 and another 2.4 million for consumers, Proia said. Ally has so far paid $5.4 billion to the Treasury.

Many of the bankers Ally brought on to prepare for an IPO have been told an offering is unlikely, said two people familiar with the matter. Some of Ally’s top people working on the IPO have said they’ll leave.

Corey Pinkston, head of corporate debt and equity for Ally since January 2009, has announced his intentions to depart, Proia said in a separate telephone interview. Laura Hall, who works with Pinkston, will also be leaving.

Both executives still work at the company and have no specific departure date, Proia said. Jeff Brown, the senior executive vice president in charge of finance and corporate planning, will add Pinkston’s duties to his current role.

Elliott Management, which owns 2.3 percent of Ally, is also pressing Carpenter, the board and their advisers to explore a sale. Its letter, and an accompanying plan, also urged Carpenter not to put ResCap into bankruptcy, saying the process will mean “radical value destruction,” drag out for 12 to 18 months, and trigger billions of dollars in so-called put-back claims, where holders of mortgage-backed securities issued by ResCap try to force the company to buy back soured loans backing the bonds.

The litigation would push up Ally’s cost of funding and hurt its competitive position, the letter said.

The plan urges Carpenter to sell Ally Bank to another lender and says it could fetch $13.1 billion to $16.3 billion. The origination and loan portfolio, which provides credit and insurance to more than 18,000 car dealers, could then be sold for $10 billion to $12.5 billion, according to the document.

A transaction “in which ResCap is restructured out of court and Ally is sold to a strategic financial institution is the best option,” the letter said. “This will create significant value for all constituents at a dramatically lower all-in cost with considerably less uncertainty and execution risk.”

The plan suggests Ally should instead exchange ResCap debt for Ally debt and pay off the smaller number of put-back claims through monthly cash flow. A number of the put-back claims would go away in 2013 or 2014 due to a statute of limitations on such claims, according to the plan.

Carpenter, the Ally board and his advisers haven’t responded to the proposal from Elliott, according to a person familiar with the matter.

“The fact remains that addressing the risks in the mortgage business is the key to successfully pursuing any and all future strategies,” Proia said in the e-mailed statement. She declined to comment on whether the company has seen the plan.