WASHINGTON — The Treasury Department has raised the government’s estimate of taxpayer losses due to the auto bailout by more than $400 million to $14.33 billion.

Earlier this summer, the Treasury had pared its loss estimate to $13.91 billion on its $85 billion bailout of General Motors Co., Chrysler Group LLC and auto finance companies according to The Detroit News.

Overall, the Treasury Department hiked its estimates that it will lose $36.7 billion on its $700 billion Troubled Asset Relief Program, including the value of some AIG shares.

That’s up from an earlier estimate of $29.6 billion.

A Treasury spokesman didn’t immediately comment on the reason for the change in the estimate.

The new estimate, posted late last week on a government’s website, is as of June 30 and doesn’t include a recent falloff in the price of GM stock.

In July, the value of the government’s stake fell by $1.34 billion. At current prices, the government would lose more than $13 billion on its GM rescue.

The government has recovered about $23.1 billion of its $49.5 billion bailout of GM and still holds a 26 percent stake — or 500 million shares — after it shed about half of its majority stake.

The government lost $1.3 billion on its $12.5 billion bailout of Chrysler Group LLC and completely exited its bailout of the Auburn Hills automaker in July. Fiat SpA now holds a majority stake in Chrysler.

The government’s efforts to shrink more of its GM stock and part of its majority stake in Detroit-based lender Ally Financial Inc. have been hampered by the weak overall stock markets.

The U.S. Treasury Department plans to raise $5 billion as part of a $6 billion offering when Ally becomes publicly traded. The Treasury Department owns a controlling 74 percent stake in Ally as part of the $17.2 billion bailout during the financial crisis.

About $126 billion of the $470 billion used in the Troubled Asset Relief Program is outstanding. The losses include $46 billion used by Treasury for housing programs.

WASHINGTON – The Treasury Department began its exit from auto and mortgage lender Ally Financial Inc. Tuesday by moving to sell up to $2.7 billion in securities it holds in the Detroit company.

The government expects to sell at least $1 billion of the securities to Wall Street investors today, with the sale set to close Monday, according to sources familiar with the plans.

Treasury won’t sell the securities for less than their face value, the sources said. Strong demand on Wall Street may allow for the sale of the full $2.7 billion.

Ally outlined the sales plan in a filing Tuesday with the Securities and Exchange Commission, reported The Detroit News.

The government will sell trust preferred securities received from Ally, according to the filing. The securities are like bonds and entitle holders to receive about 8 percent interest.

The government holds a 74 percent stake in Ally as part of its $17.2 billion bailout.

The potential sale comes as Ally wants to go public by year’s end, but a tense relationship with former parent company General Motors Co. could complicate its pitch to investors.

A majority stake in GMAC, the precursor to Ally, was sold by GM to Cerberus Capital Management LP in 2006.

GM last year acquired its own subprime lending arm, AmeriCredit, and is considering broadening its portfolio to include loans to consumers with stronger credit.

Ally CEO Michael Carpenter held meetings with GM and Chrysler dealers last month at the National Automobile Dealers Association. In a break from prior practice, GM and Chrysler officials weren’t present. Ally provides wholesale financing to more than 75 percent of both GM and Chrysler dealers.

Last summer, GM approached Ally about acquiring its wholesale business, but was rejected. Instead, the automaker bought AmeriCredit and renamed it GM Financial. Lending by AmeriCredit more than doubled in the last three months of 2010, and GM has boosted its share of sales to subprime customers.

Ally has paid the Treasury $2.2 billion in dividends. The sale will mark the government’s first sale as it seeks to recoup its bailout.

The sale does not include any of Treasury’s $5.9 billion of mandatory convertible preferred stock in Ally, nor does it include any of Treasury’s holdings of 74 percent of Ally’s common stock, according to Ally’s filing with the SEC.

Citigroup, Deutsche Bank, J.P. Morgan and Morgan Stanley are acting as joint lead managers for the offering.

The Treasury Department neglected to consider the potential job losses and economic impact when it pushed General Motors and Chrysler LLC to step up plans to close dealerships as part of their government-funded restructurings, a federal watchdog said.

A report by the Special Inspector General for the Troubled Asset Relief Program that handled the federal bailouts said the Obama administration’s auto industry task force wasn’t focusing on the savings for the automakers either when it pushed them to shut dealerships faster, reported The Detroit News.

“The fact that Treasury was acting in part as an investor in GM and Chrysler does not insulate Treasury from its responsibility to the broader economy,” said the audit by Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, the $787 billion stimulus program known as TARP.

“Job losses at terminated dealerships were apparently not a substantial factor in the Auto Team’s consideration of the dealership termination issue,” it said.

The Auto Team is part of the Treasury Department, which objected strongly to the report and denied pushing GM and Chrysler to single out dealerships in March of 2009 when it asked them to revise their restructuring plans.

In a letter attached to the inspector’s report, a senior Treasury official said the restructurings required “deep and painful sacrifices” from all stakeholders.

“The Administration’s actions not only avoided a potential catastrophic collapse and brought needed stability to the entire auto industry, but they also saved hundreds of thousands of American jobs, and gave GM and Chrysler a chance to re-emerge as viable, competitive American businesses,” said Herbert Allison, assistant secretary for financial stability at the Treasury Department.

Administration officials said it was easy in hindsight to question whether things could have been done differently. The report “takes the situation dramatically out of context,” one administration official said.

Two of Detroit’s three automakers were on the verge of extinction, the official said. “Over a million jobs were saved by virtue of saving GM and Chrysler.”

While the report focused on job losses at dealerships, more were lost in other parts of the industry, another administration official said. Since June 2007, the number of jobs in auto manufacturing has fallen 30 percent, compared with an 18 percent drop in auto retailing jobs.

In March of 2009, after the Auto Team rejected the restructuring plans submitted by GM and Chrysler along with requests for aid, the companies revised their plans. Chrysler said it would terminate 789 dealerships by June 10, 2009, and GM announced plans to close 1,454 dealerships by October 2010.

The terminations remain an issue, with some dealers still appealing the decisions while automakers find they need some of the stores.

The report also stoked political differences over the government’s role. “This sobering report should serve as a wake-up call as to the implications of politically orchestrated bailouts and how putting decisions about private enterprise in the hands of political appointees and bureaucrats can lead to costly and unintended consequences,” said Rep. Darrell Issa, R-Calif., ranking member of the House Committee on Oversight and Government Reform.

GM said that it was showing “substantial progress” a year later. “The events depicted in the report have since been overtaken by a new GM and a stronger dealer network to match,” it said.

The Treasury Department is interviewing Wall Street bankers to advise the government on an IPO of General Motors Co., the most serious sign yet that the government is moving to end its auto-industry ownership, The Wall Street Journal reported.

Among the Wall Street firms vying for the role are Greenhill & Co., Lazard Ltd. and Perella Weinberg Partners, according to people familiar with the meetings. The Treasury department declined to comment.

While an initial public offering is still several months away at the earliest, the investment-banker pitches, known as a “bake-off,” held this past week represent the most concrete steps the U.S. has taken to recoup its bailout stake, one of a string of massive cash injections to prop up major U.S. companies during the market meltdown.

The U.S. holds a 61 percent stake in GM after its $50 billion bailout of the automaker last year, which included a 40-day stay in bankruptcy that ended July 10. Under the deal, GM was to directly repay a $6.7 billion loan, which it did last month. The rest of the U.S. investment is in the form of an equity stake that the government can start selling off after GM launches an IPO.

In addition to the U.S. stake, the United Auto Workers owns 18 percent through a trust for retiree health care, the Canadian government has 12 percent and GM’s bondholders have 10 percent.

GM Chairman and CEO Edward E. Whitacre has resisted making public any timetable for GM’s offering. He backed off an earlier target of 2010 set by his predecessor Frederick “Fritz” Henderson.

Whitacre has said the move to go public depends on market conditions and the company’s financial position. Both the administration and GM say the automaker will make the call on when to go public.

WASHINGTON – The Treasury Department and General Motors Co. are in talks to finalize the pay package for GM’s new CEO, Edward Whitacre Jr., The Detroit News reported.

Whitacre was named chief executive by the GM board Jan. 25, after the company ended its search for a permanent CEO less than two months after starting it.

More than two weeks after starting, Whitacre’s salary and pay package hasn’t been finalized.

Since GM is among the companies that have received exceptional assistance under the $700 billion Troubled Asset Relief Program, the Treasury Department’s special master, Ken Feinberg, must approve of the pay for its top 25 executives.

A Treasury spokeswoman, Meg Reilly, said Monday that “discussions are ongoing. We expect to reach a decision soon, but have no update at this time.”

The Treasury Department, which owns 61 percent of GM and invested $50 billion in the automaker, named Whitacre to chair GM’s board in July.

GM also said it was still in talks with Treasury.

Separately, GM submitted by late January its pay proposals for its other top 25 executives as Treasury begins its review of 2010 pay.

Feinberg had ordered a 25 percent cut in the salary for GM’s then-CEO Fritz Henderson, to $950,000, in October.

GM’s pay for its top 25 execs fell by 31 percent for salaries and 20.4 percent in total compensation, Feinberg ruled in October. Just one other executive in GM’s top 25, beyond the CEO, was to earn more than $500,000 in cash.

WASHINGTON – The Treasury Department has told four bailed-out companies that they can’t pay some top earners more than $500,000 cash per year. But the official who made that decision has said that the rule shouldn’t always apply, according to reports by The Associated Press.

Kenneth Feinberg, the Obama administration’s pay czar, said Friday that lobbying by Treasury and Federal Reserve officials helped persuade him to exempt about 12 executives from the salary cap. The pay cap will affect about 300 employees at Citigroup Inc., GMAC, American International Group Inc. and General Motors.

The move highlights tension between the government’s competing priorities: Appeasing public fury over outsized pay, while making sure the firms retain the talent they need to stay competitive and repay their taxpayer billions.

“It’s a little like you have the left half of your brain and the right half of your brain arguing,” said Douglas Elliott, a fellow at the Brookings Institution and former investment banker.

“As an owner, you can see why the government wouldn’t want to make these rules too onerous. But as a regulator, following the will of Congress, there’s an intention to hold these firms accountable and to hold down what they pay their top executives,” Elliott told the AP.

Outrage over banker salaries exploded this year after it was revealed that AIG would pay millions in bonuses to employees of the division that had toppled the company. The government provided up to $182 billion to stabilize AIG. Congress held hearings and grilled Treasury Secretary Timothy Geithner about the bonuses.

The Obama administration responded by appointing Feinberg. He oversees pay packages for the top 100 earners at the companies that received the largest bailouts.

As they negotiated their pay packages, the companies warned that pay restrictions could keep them from attracting and retaining top talent. Without competitive pay, they said, it would be hard to regain their footing and repay their bailout money.