WASHINGTON — The Treasury Department on Thursday confirmed it has boosted government aid to GMAC LLC, providing the troubled auto finance arm of General Motors with an additional $7.5 billion.

The aid was provided in the form of mandatory convertible preferred shares, meaning the government won't immediately become a majority owner of the company. However, the shares can be converted to create a boost common equity as needed.

Treasury disclosed little information about the rules attached to the mandatory convertible preferred shares, but said it intends to convert an $884million loan it previously made to GM into a common equity of GMAC, which would result in the government holding 35.4% of GMAC's common equity.

"Over the past several months, the contraction of credit in the auto finance markets has helped drive our auto industry into a historic crisis," Treasury Secretary Timothy Geithner said in a statement. "This new arrangement with GMAC will help provide a reliable source of financing to both auto dealers and customers seeking to buy cars."

Treasury's latest aid to GMAC includes $4 billion for financing Chrysler dealer and retail loans. The remaining $3.5 billion is aimed at helping GMAC fill a capital hole regulators identified during recent stress tests of the nation's largest financial institutions. GMAC is required to raise $11.5 billion of Tier 1 common or contingent common capital, $9.1 billion of which must be new Tier 1 capital, according to the U.S. Treasury.

Treasury already has provided GMAC with $5 billion in assistance through the Troubled Asset Relief Program, a $700 billion bailout package approved by Congress last fall.

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