GMAC loosens credit to expand auto lending

The automaker is also offering financing between 0.9 percent and 5.9 percent on more than three dozen other 2008 and 2009 models, including many trucks and SUVs. The deal runs through Jan. 5.

In addition to the $5 billion for GMAC, the Treasury also will lend up to $1 billion to GM so that the company can purchase additional equity that GMAC is planning to offer as part of its effort to raise more capital.

In exchange for the funding, the government will receive preferred shares that pay an 8 percent dividend and warrants to purchase additional shares in return for the money, the department said.

The Treasury did not require that GMAC engage in more lending as a condition for receiving the government investment, spokeswoman Brookly McLaughlin said.

The $6 billion in total assistance means that Treasury has now committed more than the first $350 billion from the $700 billion bank rescue program. Under the law governing the program, the administration must ask Congress for the second half of the funds and Congress can vote to block their release.

A Treasury official said the financing for GMAC comes from the first $350 billion, since not all of the allocated funds have been spent yet. For example, only about $162 billion from the $250 billion that was set aside in October for investment into the banks has been spent.

But the official added, "it's clear that Congress will need to release the remainder of the TARP."

The $5 billion investment in GMAC has already been completed. Treasury is seeking to finalize the $1 billion loan by Jan. 16.

This isn't the first time that the Bush administration has committed more than the first half of the bailout money. About $4 billion of the $17.4 billion in loans the administration promised Dec. 19 for GM and Chrysler LLC would have to be paid out of the second $350 billion.

But it is far from guaranteed that Congress will release the extra money. Lawmakers from both parties have criticized the Treasury Department for lax oversight of the funds it provided to banks and for not using some of the money to prevent home foreclosures.

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