GM 'seeking aid for rival tie-up'

Ailing car giant General Motors has reportedly called for aid from Washington to push through its merger with rival Chrysler.

Both companies are losing money, and see the marriage as their only chance of survival. But the only way the deal can go ahead is with federal government support, according to insiders quoted by Bloomberg.

Treasury Secretary Hank Paulson is said to favour assistance through an already-planned $25 billion (£15.69 billion) loan rather than the $700 billion he has to shore up the banking system. But that loan was designed to help Detroit re-tool to make more fuel-efficient vehicles. That could lead to restrictions on its use, and is unlikely to be available for six months or more.

GM and Chrysler, owned by private-equity firm Cerberus, have estimated that a merger would need $10 billion in new equity to shut plants, cut jobs, integrate operations and add liquidity.