Feds may give GM $5 billion for merger

Citing a person with knowledge of the matter, the Wall Street Journal is reporting the Bush administration is working to give General Motors access to as much as $5 billion from the $25 billion in low-cost loans Congress recently approved for the auto industry. The money could help fund the GM-Chrysler merger.

The loans, which are being administered by the U.S. Department of Energy, are supposed to be used to help the American automakers retool plants and develop vehicles to meet new fuel-efficiency standards. The Detroit automakers had fought for less restrictive language but were rebuffed by Congress. This makes it unclear whether the funds could be used for the proposed merger.

White House spokeswoman Dana Perino said Monday that there is a possibility that Chrysler, Ford and GM could qualify for a direct investment or an asset-purchase from the $700 billion bailout fund. However, other administration officials are playing down that possibility for now.

The $5 billion is about half the investment GM is seeking from the federal government to fund the proposed merger with Chrysler.