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Government won't support GM-Chrysler merger The U.S. Treasury Department, armed with a $700-billion fund to help salvage the economy, is no longer talking to automakers about possible aid, further complicating efforts by General Motors to seek help for a merger with Chrysler, the Free Press was told Thursday. The Treasury is not negotiating with automakers," a Bush administration official said late Thursday. It's not known why the Treasury stopped talking, but GM and other automakers are now turning to other parts of the administration for financial assistance.
Treasury is skittish about the idea of pumping billions of taxpayer dollars into a merger resulting in tens of thousands of job losses, people briefed on the matter said.
Treasury officials have been stretched in recent weeks, managing the $700-billion rescue of the financial industry, including taking stakes in several banks.
Chrysler owner Cerberus Capital Management and GM have been in talks for weeks to merge the two automakers, but the deal is being held up by financing. Such a merger likely would lead to 90,000 job losses at Chrysler and suppliers, according to a report released Thursday.
"The biggest problem they have right now is the government's participation. The government does not want to participate on a merger basis," a person briefed on the talks said.
Also Thursday, Democratic presidential nominee Barack Obama said he wants to meet with the leaders of the Detroit automakers and the UAW if elected, and auto dealers asked Congress to help their struggling businesses.
With the current state of GM's troubled finances, the automaker's urgent pursuit of government help presumably would be occurring with or without the specter of a Chrysler deal hanging in the air. GM has been seeking up to $10 billion in aid from federal officials.
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