* TARP watchdog to study GM, Chrysler dealer closures

* Also to study warrant valuations, Citi asset guarantee

A U.S. Treasury Department watchdog will study decisions by General Motors Co [GM.UL] and Chrysler to cut more than 2,000 dealers, a key bailout watchdog said on Thursday.

Neil Barofsky, special inspector general for the Troubled Asset Relief Program, said his office will examine the process used by the automakers to identify which dealerships to maintain or terminate, as part of their restructuring processes.

The Obama administration's autos task force has provided more than $60 billion in bailout financing from the TARP fund for GM and Chrysler, which have both emerged from bankruptcy.

Hundreds of dealers assert that their rights were trampled on during the automakers' bankruptcies, leaving them with little or no legal recourse.

Barofsky's commitment to study the automakers' decisions regarding dealership cuts comes after lawmakers have derided the process.

Senator John Rockefeller, chairman of the Commerce Committee, in July asked for Barofsky to look into the matter, saying there was substantial confusion among dealers themselves as to how GM and Chrysler selected dealerships to close.

Barofsky also said in written testimony to be delivered before the Senate that his office plans to study the valuation process for warrants in the government's capital injection program for the bank industry, and governance issues at companies in which the U.S. holds large ownership stakes.

His office also plans to study the status of the government's asset guarantee program with Citigroup (C.N), and the government's program to encourage mortgage modifications.

(Reporting by Karey Wutkowski; Editing by Richard Chang)

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