Merger talks may heat up after elections

Merger talks are not only continuing between General Motors Corp. and Cerberus Capital Management, they may intensify this week as the companies try to gauge the Washington winds following the elections tomorrow.

According to Bloomberg News, people familiar with the discussions say GM and Cerberus still want the merger but have had to put off their hopes of a rapid settlement after the Bush Administration announced it was not going to consider any aid to the auto industry beyond the $25 billion in low-cost loans Congress approved for plant modernization. GM CEO Rick Wagoner has been lobbying federal officials, hoping to persuade them to supply the $10-$12 billion that will be required to implement the merger but Treasury Secretary Henry Paulson is unwilling to let the automaker tap into the $700 billion fund earmarked for the bailout of the banking system.