WASHINGTON – The Treasury Department is ready to inject more than $7 billion into GMAC to allow it to grants loans for car purchases at General Motors and Chrysler, The Wall Street Journal reported.

The money would be the first installment of a new government aid package that could reach $14 billion in GMAC, which is now owned by GM and a group led by private-equity firm Cerberus Capital Management LP.

The increasing infusion of taxpayer money into GMAC could turn the federal government into a large and potentially majority shareholder in the company,

Whether the U.S. would be a majority shareholder depends on how the arrangement is structured. It’s possible the U.S. would have to invest less than the $14 billion headline figure.

Much of the initial money will go to helping GMAC shoulder new lending responsibilities for Chrysler dealers and consumers after Chrysler’s government-orchestrated Chapter 11 bankruptcy filing last month.

GMAC, long a lending affiliate to GM, was scheduled to take over Chrysler Financial’s lending duties last Friday, but that move was delayed as Treasury officials scrambled to resolve differences over how much to give GMAC.

Treasury officials declined to comment on the pending announcement. GMAC spokeswoman Gina Proia said the company was anticipating significant government support for the Chrysler financing, but she declined to elaborate.

The rest of the funds would be used to help the company revive its battered balance sheet. After completing stress tests of the country’s top 19 financial institutions earlier this month, Treasury and the Federal Reserve said GMAC needed to increase its capital reserves by $11.5 billion.

The company, which is revamping its board of directors, is scheduled to issue a report June 8 on how it plans to bulk up its reserves. The vast majority of the money is expected to come from the federal government.

The Treasury put $5 billion into GMAC in December.

The cost of the wider government effort to rescue the U.S. auto industry is escalating rapidly, and could exceed $80 billion by the end of this year, which would be second only to the government’s rescue of insurer American International Group Inc.

The government has sunk nearly $16 billion into GM and plans to put at least $12.5 billion into Chrysler. Ushering GM through a bankruptcy process, as now seems increasingly likely, would demand many tens of billions of dollars more in government assistance.

In addition, the Energy Department plans over coming years to invest as much as $25 billion– and potentially as much as $50 billion, under legislation now being debated in Congress — to promote fuel-efficient engines. The government has also put more than $8 billion in recent months into programs to help shore up auto suppliers, car warranties, and consumer auto loans.

Treasury Secretary Timothy Geithner told Reuters earlier this month that GMAC would need “substantial support” from the government.

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