WASHINGTON (Reuters) - The U.S. Treasury Department is not negotiating with General Motors Corp and the owners of Chrysler LLC on a request to provide direct government aid to their proposed merger, a Bush administration official said on Thursday.
Instead, the administration is working to speed the distribution to automakers of $25 billion in factory retooling funds authorized by Congress last month, the official told Reuters.
Earlier this week, industry sources said GM had asked for roughly $10 billion in an unprecedented government rescue package to support its acquisition of Chrysler from Cerberus Capital Management.
The request was viewed as over and above the $25 billion in funds to enable the automakers to produce fuel-efficient vehicles.
"Treasury is not negotiating with the automakers, the administration is working to get the $25 billion Congress already authorized to the industry," the official said.
A GM spokesman had no immediate comment.
The Treasury did confirm that automakers' financial companies, such as GMAC LLC and Chrysler Financial, would qualify to sell distressed assets to the Treasury when it launches reverse auctions under its $700 billion market bailout plan.
However, the finance arms would have to be registered as federally regulated bank holding companies for them to qualify for a capital injection under the $250 billion equity purchase portion of the program.
GMAC said on Thursday it was seeking the bank holding company designation.
(Reporting by David Lawder; Editing by Dan Grebler)
