WASHINGTON - Chrysler Financial LLC is no longer subject to the oversight of the Treasury Department's pay czar as it considers getting back into the lending business, reported The Detroit News.

The Treasury Department dropped Chrysler Financial after the Farmington Hills-based firm's parent company repaid $1.9 billion in federal loans in May. That partial payment clears the way for Cerberus Capital Management LP to find a new use for the company.

The Treasury Department's special inspector general for TARP made the disclosure Wednesday in a quarterly report to Congress.

Chrysler Financial had been one of five companies covered by the Treasury Department's special master overseeing pay for the top 100 executives at each company that received assistance under the $700 billion Troubled Asset Relief Program. Pay czar Kenneth Feinberg plans to issue a report this week on executive compensation.

Treasury's move comes after Bloomberg News reported this week that Chrysler Financial may seek to re-enter the auto lending business. One reason Feinberg granted approval for higher cash pay to Chrysler Financial executives late last year is because the company told the Treasury Department it planned to wind down its operations by the end of 2011.

Cerberus, a New York private equity firm, acquired an 80.1 percent stake in Chrysler and its finance arm in 2007.

When the Bush administration loaned $4 billion to Chrysler LLC in January 2009, it slapped a $2 billion lien on Chrysler Financial.

Although the loan was cut to $500 million when the Auburn Hills automaker filed for bankruptcy last year, the government still pursued payment from Chrysler Financial.

As a result of the partial repayment, the government eliminated the company's debtor-in-possession loan of $1.9 billion provided by the Treasury to Old Chrysler -- the company that held the assets that post-bankruptcy Chrysler no longer wanted.

The Treasury Department said that while the repayment "is less than face value, (it) is significantly more than the Treasury expected to recover on this loan."

Cerberus hired consultants to explore options for Chrysler Financial, which has been winding down since the government ordered new car and dealer lending for Chrysler switched to GMAC, now called Ally Financial.

Cerberus' equity in Chrysler Group was wiped out during the bankruptcy.

The U.S. government owns 9.9 percent of Chrysler Group's equity. The automaker has $5.7 billion in outstanding aid from the U.S. Treasury and $1.2 billion in outstanding Canadian government loans.

It also has $2.4 billion in undrawn government loans -- $2 billion of it from the Treasury.

Chrysler's first government payment is due next year and the automaker has said it will repay its bill in full by 2014.