GM wants USA government to help fund Chrysler merger

General Motors Corp., the largest U.S. automaker, has asked the Treasury Department for financial aid to help complete a merger with Cerberus Capital Management LP's Chrysler LLC, two people with knowledge of the matter said.

Treasury Secretary Henry Paulson would prefer any funding come from the $25 billion in low-interest loans approved last month for the auto industry to build more-efficient vehicles, not the $700 billion banking-system rescue, said the people, who asked not to be identified because the talks are private.

GM executives have asked Treasury to consider taking a stake in the Detroit-based company, said one of the people, though the government is reluctant to do so.

Federal aid may boost cash for the money-losing automakers while they await merger savings that analysts have said may take months to realize. The U.S. auto market may shrink this year to the smallest since 1993 as the credit crunch and a slowing economy crimp demand.

“These companies are both hurting,'' said Louis Lataif, a former Ford Motor Co. executive who is now dean of Boston University's School of Management. “Absent government intervention, it's difficult to see how this merger makes sense.'' Bloomberg.com