Treasury takes step to sell stake in auto lender

WASHINGTON – The Treasury Department says it has taken a step to recover the taxpayer funds invested in Ally Financial, the auto lender formerly known as GMAC.

The government is converting about a third of its $17.2 billion investment from preferred securities to common stock. That should make it easier to sell its stake, Treasury officials said. The conversion increases the government's ownership of Ally to 74 percent from 56 percent.

The Treasury Department first bailed out the company in late 2008, as part of the Bush administration's assistance to the U.S. auto industry. The Obama administration invested additional sums in May and December 2009.

The company "has made substantial progress in restructuring its operations," Treasury Acting Assistant Secretary for Financial Stability Tim Massad said.