By accepting funding from the Treasury Department's Troubled Asset Relief Program, GMAC LLC has made a commitment to expand its lending criteria.

In doing so, it will have to clear a hurdle that other Tarp funding recipients say they have encountered: finding customers both able and willing to borrow.

Observers said that the relaxed standards GMAC is offering on auto loans may not be enough to overcome the poor economy and the slumping demand for American cars.

And, with the finance company's future in doubt in recent months, many car buyers have turned to other sources of credit, notably credit unions.

GMAC, which is jointly owned by General Motors Corp. and the private-equity firm Cerberus Capital Management LP, said Tuesday that it would lend to consumers with credit scores of 621 or higher to boost auto sales. Two months ago it had set its score minimum at 700, eliminating all but prime borrowers.

Bill Muir, GMAC's president, said in a press release that it would put its Tarp funding to use immediately "to facilitate the purchase of cars and trucks" in this country.

"The actions of the federal government to support GMAC are having an immediate and meaningful effect on our ability to provide credit to automotive customers," Mr. Muir said.

But Brian Johnson, an analyst at Barclays Capital, said that lowering score minimums would not be enough to help General Motors' sluggish sales.

Lowering credit scores "will make a difference in helping GM go from horrible to bad, but it won't necessarily reboot sales," Mr. Johnson said. "They're still looking at sales levels that are below historical run rates, indicating that as much as we talk about the credit crunch, there's a fair amount of consumers putting off buying a new car."

Since last month, when GMAC applied to convert to a bank holding company and curtailed its lending, credit unions have stepped in to fill the gap by providing funding to consumers and auto dealers, Mr. Johnson said. "Who was serving GM dealers, even though sales were lousy? Ninety percent of loans were coming from somewhere else."

The banking system "did serve many of the customers that GMAC wasn't serving," Mr. Johnson said. "There are interesting questions about whether this has changed the competitive landscape for indirect lending, which could support a theory that small is better" when it comes to auto financing.

Still, the outlook remains bleak for an improvement in auto sales. The Conference Board reported Tuesday that its December consumer confidence index sank to an all-time low of 38 (on a scale of 0 to 100). Last month the index was 44.7.

Last week the Federal Reserve Board approved GMAC's application to become a bank holding company.

The Treasury has purchased $5 billion of senior preferred stock in the finance company with an 8% dividend. GMAC will issue warrants in the form of additional preferred equity in an amount equal to 5% of the preferred stock purchase; the warrants, if exercised, would pay a 9% dividend.

In addition, the Treasury will lend GM up to $1 billion, so the automaker can participate in a rights offering for GMAC's conversion from a Utah industrial loan company to a bank holding company.

Adam Levitin, an associate professor at Georgetown University Law Center, said that the federal government's arrangement with GMAC could become "a leading case study in moral hazard."

The Treasury had "a whole arsenal of unused tools" available for pushing through GMAC's debt-exchange offer and avoiding a preferred stock injection, Prof. Levitin said. For example, the Treasury could have purchased GMAC bonds at pennies on the dollar to leverage remaining bondholders to approve the debt exchange this month, he said.

"This move sends a very strong message that Treasury isn't willing to play hardball to force risk on to investors, not taxpayers," he said. "The GMAC bailout sets an example that encourages all of the GM and Chrysler constituencies not to compromise. If Treasury will bail out GMAC, which has little purpose without GM, surely it will also bail out GM."

According to Prof. Levitin, a test case will come in March, when GM and Chrysler LLC will be required to meet restructuring goals for the funding the Bush administration has approved for them this month.

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