The federal government said Wednesday that it will take majority control of troubled auto lender GMAC and provide an additional $3.8 billion in aid to the company, which has been unable to raise from private investors the money it needs to stanch its losses. The Treasury Department has said for months that GMAC would need more federal money, but the decision to increase the government's ownership stake came as a surprise, cutting against the grain of the Obama administration's recent efforts to wind down its bailout of large banks. What initially appeared to be a closing act now looks more like year-end portfolio rebalancing, with companies including Citigroup and Bank of America allowed to repay aid even as the government deepens its involvement in mortgage financiers Fannie Mae and Freddie Mac -- and now, GMAC. The government now owns majority ownership stakes in those three firms along with General Motors and insurance giant American International Group. It also holds large stakes in Citigroup and Chrysler. The additional aid for GMAC underscores both its struggles and its importance to the administration's efforts to revive the auto industry. GMAC, which already has taken $12.5 billion in direct federal aid along with other forms of government support, is the largest lender to General Motors and Chrysler dealerships and to their customers. Treasury said that it will increase its stake in GMAC to 56 percent from 35 percent. The government also will hold about $14 billion in what amounts to loans that GMAC may eventually repay. The government plans to appoint four of the company's nine directors. Wednesday's announcement is a coda to the stress test of 19 large banks conducted earlier this year. GMAC, which was required to add $9.1 billion to its capital reserves against unexpected losses, was the only bank unable to satisfy regulators by finding private investors. 'We said, if you do not go raise capital from the private markets, if you are unable to, we will put capital into you because it is important to the stability of the system,' Treasury Secretary Timothy Geithner told the Congressional Oversight Panel earlier this month. 'It was never going to be possible for GMAC. They are in a unique and difficult situation.' Congressional Republicans criticized the action Wednesday. 'The government should be releasing its grip on financial institutions, not buying more of them,' said Rep. Tom Price, R-Ga., chairman of the Republican study committee, a conservative House caucus. GMAC was created to finance GM auto sales, but during the housing boom it focused on mortgage lending. The company, no longer owned by GM, lost $13 billion in the last three years as borrowers defaulted on those loans. The federal aid will help GMAC sop up those losses and return to its roots. GMAC said Wednesday that it will take a pretax charge of $3.8 billion in the fourth quarter, largely reflecting the decline in the value of its mortgage-related investments. The company also said that it was exploring 'strategic alternatives' for its mortgage business, Residential Capital, indicating that the business may be sold. 'The auto-finance business is our core business,' GMAC spokeswoman Gina Proia said. 'It's been the cornerstone of GMAC's operations, and the reason that we have investments from the U.S. government is to help support the auto industry.' The government also is helping the company replace its funding model. GMAC grew up outside the banking industry, raising money from investors to make loans, but the flow of funding dried up with the financial crisis. A year ago, the Federal Reserve gave GMAC emergency approval to create a bank, allowing it to gather deposits instead. Treasury also invested $5 billion under its bailout program for the banking industry. In May, following the stress tests, Treasury invested another $7.5 billion in GMAC. The Treasury also tasked the company with lending to Chrysler dealers and buyers. Regulators originally set a deadline of Nov. 9 for GMAC to raise the rest of the money required under the stress test. One week after GMAC passed that deadline without raising the required capital, the company removed its chief executive, Al de Molina, and asked regulators for more time. Since then, GMAC's new chief executive, Michael Carpenter, has convinced the government that the company did not need to raise a full $5.6 billion in additional capital, in large part because its auto lending business suffered less than expected from the restructuring of GM and Chrysler. Carpenter said in an interview Wednesday that the government's majority ownership stake would not impede GMAC's ability to return to profitability. 'It doesn't really change things very much at all,' Carpenter said. 'Their desire is to see the company be successful.' Carpenter also said he is confident that this third round of federal aid would suffice. 'If I thought we needed more capital, I would have asked for more capital,' he said. He added that the company's greatest challenge now is to regain the confidence of private investors to help fund its operations. 