UPDATE 3-U.S. puts up $6 bln to support auto lender GMAC
(Adds details, background)
By Mark Felsenthal
WASHINGTON Dec 29 (Reuters) - The Bush administration on Monday expanded its bailout of the U.S. auto industry, saying it was buying $5 billion in equity in auto and mortgage finance company GMAC and increasing a loan to General Motors (GM.N: Cotización) by $1 billion.
The action was the latest in a lengthy series of emergency government moves aimed at easing the worst credit crisis since the 1930s and limiting the severity of a year-long recession.
The Treasury Department said it would buy $5 billion in senior preferred equity with an 8 percent dividend from GMAC as part of an effort to ensure the solvency of a company considered crucial to GM's survival.
It also said it would lend up to $1 billion to fund GM's purchase of equity in support of GMAC's reorganization as a bank holding company. That loan would come on top of assistance extended to the No. 1 U.S. automaker earlier this month.
The government agreed on Dec. 19 to rescue GM and Chrysler LLC with up to $17.4 billion in loans to stave off a collapse that would have cost hundreds of thousands of jobs and dealt a severe blow to an economy already in recession. Of that amount, $13.4 billion was earmarked for GM. [ID:nN19442904]
President George W. Bush said at the time that it would be irresponsible to let the automakers die. The White House moved on its own after Republicans in the Democratic-controlled Congress blocked a deal to provide emergency funds. Continuación...