The Treasury Department stepped into the auto industry in a big way Monday evening, when it agreed to invest $6 billion to stabilize auto financing giant GMAC LLC, “as part of a broader program to assist the domestic automotive industry.” Whether the infusion will help ailing mortgage arm Residential Capital, LLC, however, is another question entirely. The Treasury said it will purchase $5 billion in senior preferred equity and offer a new loan, up to $1 billion, to General Motors Corp. (GM) so the auto maker can invest in a rights offering at GMAC — the loan comes in addition to the recent $17.4 billion “rescue” allotted to GM and Chrysler LLC on Dec. 19. After news of the investment, GMAC said in a press release Tuesday, the company “will immediately resume auto financing for a broader spectrum of U.S. customers,” as it will modify its credit criteria to include retail financing for customers with a credit score of 621 or above — an expansion of credit compared to the 700 minimum score put in place two months ago. “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,” said GMAC President Bill Muir in a prepared statement, according to a Wall Street Journal report. The $6 billion in aid will be funded through the recently-maligned Troubled Asset Relief Program. GMAC Financial Services announced the day before Christmas that its application to become a bank holding company had been approved by the Federal Reserve, making the firm a viable candidate for TARP aid. Bankruptcy had appeared on the horizon for giant GMAC — who finances 80 percent of wholesale purchases of GM’s cars world-wide —  and its monster mortgage lending arm ResCap in recent weeks, as investors had thus far balked at a $38 billion debt exchange needed to raise sufficient capital for the ailing financial firm to become a federally-chartered bank holding company. Analysts at Moody’s Investors Services have surmised that ResCap’s future is likely in doubt, regardless of GMAC’s access to TARP funding by becoming a bank holding company. A thirty-plus year mortgage veteran, who asked to remained unnamed, agreed that TARP funding won’t do the trick. “The solution to ResCap making a turnaround is a totally revamped management team, and much smaller in size, with very specific goals and expense controls, which I’ll almost guarantee you they don’t have,” he said. We’re likely, however, to see more TARP funds streamed to the auto industry. Treasury Department said Monday, according to the Wall Street Journal, it had put a program in place, within TARP, specifically to help banks make investments in the auto industry. As hand-outs of TARP aid continue, Paulson will likely have to plead with Congress to release the last of the $350 billion installment of TARP funds before the middle of January. Write to Kelly Curran at kelly.curran@housingwire.com. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.