The U.S. Treasury on Tuesday committed $6 billion to support GMAC LLC, the financing arm of General Motors, in an effort to keep the U.S. automaker giant from bankruptcy. The Treasury will purchase a $5 billion stake in GMAC and lend $1 billion to GM so the automaker can contribute to the lender's reorganization as a bank holding company, according to a statement on Monday. The loan is in addition to $13.4 billion the Treasury agreed earlier this month to lend to GM and auto giant Chrysler. The fresh capital will enable GMAC to expand lending to car buyers and help save GM. The loan comes as GM's U.S. sales fell 22 percent this year through November after GMAC ran short on cash and limited loans to people with only the best credit. The Treasury stepped in after Congress failed to pass an auto- industry bailout earlier this month. In a statement, GMAC said it “intends to act quickly to resume automotive lending to a broader spectrum of customers to support the availability of credit to consumers and businesses for the purchase of automobiles.” The lender financed about 35 percent of GM's retail customers last year. “This is part of our strategy to position GMAC for long-term stability. The reason we're doing this is so we can provide credit to consumers; we'll put these funds to use right away,” Toni Simonetti, a spokeswoman for GMAC, said about yesterday's Treasury announcement. GM's $1 billion loan from the Treasury would be used to support GMAC's rights offering. The loan may be completed by about January 16, the Treasury said. The agreement opens a new rescue program for the car industry as part of the Treasury's $700 billion Troubled Asset Relief Program. The $700 billion plan was originally designed to buy troubled assets from banks and has instead become a fund for Treasury to prop up lenders, insurers, carmakers and now auto- finance companies.
