Earlier this week, confirmed rumors began to surface that GM was aggressively courting the U.S. Treasury in hopes of securing $10-$15 billion in federal funding for a merger between General Motors and Chrysler LLC. Reportedly, GM’s request for federal aid was intended to supplement the the $25 billion already secured for Detroit under the provisions of the Energy Department’s newest loan program.
Today, it was announced that the Bush administration has formally denied GM’s lobby for federal aid. “Treasury is not negotiating with the automakers, the administration is working to get the $25 billion Congress already authorized to the industry,” an administration official said. With an additional government bailout officially off the table, experts expect Chrysler’s controlling arm, Cerberus Capital Management LP, to re-initiate discussions with Renault-Nissan as an alternative source of funding.