WASHINGTON -- The Treasury Department announced Monday evening it has given GMAC LLC, the financing arm of General Motors Corp., $6 billion in support from the Troubled Asset Relief Program.

Under the agreement, Treasury has purchased $5 billion in senior preferred stock with an 8% dividend from GMAC. In return, GMAC will issue warrants to Treasury in the form of additional preferred equity in an amount equal to 5% of the preferred stock purchase that will pay a 9% dividend if exercised.

Treasury also said it would lend up to $1 billion to General Motors so the auto company can participate in a rights offering at GMAC’s reorganization as a bank holding company.

The funds come in addition to the $9.4 billion pledged to GM on Dec. 19 and are meant to be part of a broader aid package to the beleagured auto companies.

Though Treasury has already allocated all but $1.6 billion of its initial $350 billion in funds from Tarp, Treasury said not all of those funds have yet been spent. Treasury officials dismissed the suggestion that the plan would effectively put Tarp in a deficit. The funds are not part of the $250 billion pledged to financial institutions and their holding companies, Treasury officials said.

The loan to GM is exchangeable at any time, at Treasury’s option, into GMAC equity interests being acquired by GM. The size of this loan is dependent on the level of current investor participation in the rights offerings at GMAC.

Under the agreement, GMAC had to agree to restrictions on executive compensation that were part of the original Tarp program authorized under the Oct. 3 bailout law. GMAC is only partially owned by GM, which holds a 49% controlling interest. The rest is controlled by Cerberus Capital Management, a private investment firm.

The Federal Reserve Board approved GMAC last week to become a bank holding company, contingent on a debt for equity swap that was to be completed by Dec. 26.

Treasury appears to have no unallocated funds left for Tarp. Under the Oct. 3 law, it must ask Congress for the reamining $350 billion, and give lawmakers 15 days to object. Lawmakers have made it clear they are unhappy with how Treasury has spent the first $350 billion, and said they would likely put conditions on any further funds.

A Treasury official declined to comment on whether Treasury would now seek the remaining funds. Treasury Secretary Henry Paulson said Dec. 19 that "Congress will need to release the remainder of the Tarp to support financial market stability. I will discuss that process with the congressional leadership and the president-elect's transition team in the near future."

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