WASHINGTON - Reuters reported Monday that Ally Financial Inc. is preparing to file the paperwork for an initial public stock offering as soon as next month - a move that could allow the Obama administration to cut its majority stake.

Reuters said Ally would file the IPO paperwork within the next two weeks and that the offering could raise $6 billion to $7 billion.

A person briefed on the matter, however, told The Detroit News on Tuesday that the filing is expected in the next month, but said the proceeds could be lower than Reuters reported.

Ally spokeswoman Gina Proia declined to comment on the timing of an IPO.

After the Detroit-based auto and mortgage lender files its prospectus, it will take a few months to win approval from the Securities and Exchange Commission before the company can hold its initial public offering.

Ally has said it hoped to go public in the second half of the year. That timetable is still probably on target.

The U.S. Treasury holds a 74 percent stake in the lender as part of its $17.2 billion bailout of the auto industry. The government rescued Ally, the major lender to General Motors Co. and Chrysler Group LLC dealers, to keep a source of credit to auto buyers and dealers.

Ally will work to reassure potential investors during its road show that it has a positive long-term relationship with former parent GM. The automaker has since acquired AmeriCredit and renamed it GM Financial as the basis of a captive finance arm. It is using the lender to boost its leasing and subprime business.

The Treasury Department earlier this month sold $2.7 billion in securities it holds in Ally Financial - its first step toward exiting its stake in the Detroit lender. Strong demand allowed the Treasury to sell all of the $2.7 billion in trust preferred securities - an instrument similar to a bond.

The "transaction represents an important step toward exiting our investment in Ally, as we continue to work to recover taxpayer dollars," said Tim Massad, a Treasury official who oversees the auto and bank bailouts.

Last week, GM sold all of its fixed-rate perpetual preferred stock in Ally Financial Inc. for $1 billion. GM received the security as part of its sale of 51 percent of GMAC, which was renamed Ally Financial, to Cerberus Capital management LP for $7.4 billion in 2006.

After GM exited bankruptcy, it valued its Ally Financial stake at $665 million.

The sale resulted in a gain of $300 million to be recorded in the first quarter of 2011. GM's investment will shrink to a 9.9 percent interest in Ally common stock. It's not clear if GM would participate in an Ally Financial IPO by selling some of its common stock. Ally CEO Michael Carpenter called the sale of the government stock this month "a key step in the company's plan to repay the U.S. taxpayer in full."