Oct. 27 (Bloomberg) -- General Motors Corp. Chief Executive Officer Rick Wagoner is personally leading a lobbying push for federal aid as the biggest U.S. automaker seeks to merge with Chrysler LLC, people close to the discussions said.

His involvement includes attending meetings, such as one with Treasury Department officials last week in Washington, said the people, who asked not to be identified because the talks are private. GM has asked for government funds to help combine with Cerberus Capital Management LP's Chrysler, people have said.

GM is among automakers eligible for $25 billion in low- interest borrowing to retool plants, while auto lenders may get funding from the $700 billion bailout fund to buy bad home loans and other troubled assets. GM may want $10 billion in government aid, two people familiar with the discussions said.

Wagoner, 55, was in Washington as recently as today, people said.

Treasury Secretary Henry Paulson would prefer any funding for Detroit-based GM come from the low-interest loans, not the $700 billion banking-system rescue, people familiar with the matter have said.

GM, Cerberus and Chrysler have declined to comment on their talks, which come as the global credit crunch threatens to shrink sales in their home market this year to the lowest level since 1993. GM has lost almost $70 billion since 2004, while Auburn Hills, Michigan-based Chrysler indicated its first-half loss exceeded $1.08 billion.

Dana Perino, a White House spokeswoman, declined to comment today on what if any aid might be available to help a tie-up between GM and Chrysler, the third-largest U.S. automaker.

`We'd Be Open'

``Nobody wants to see the auto industry go under,'' U.S. Senator Charles Schumer, a New York Democrat and the Banking Committee chairman, said in a Bloomberg Television interview. ``If there's some thought about doing other things for auto companies, we'd be open to it.''

Wagoner took the top spot at GM in 2000, making him the longest-serving CEO at a U.S. automaker. GM shares reached a record $96.63 in April 2000, shortly before he took the helm. They fell to $4.76, the lowest since 1950, on Oct. 9 as the U.S. auto-sales outlook worsened.

GM slid 50 cents, or 8.4 percent, to $5.45 in New York Stock Exchange composite trading. The shares have tumbled 78 percent this year, the worst performance among the 30 companies in the Dow Jones Industrial Average.

More Cash

A combined GM-Chrysler would need $10 billion to $12 billion in additional cash to integrate operations, Citigroup Global Markets Inc.'s Itay Michaeli wrote in a note to investors on Oct. 20. The New York-based analyst rates GM as ``sell.''

The Energy Department is working to release $5 billion to GM through the loan program, the Wall Street Journal reported on its Web site today, citing a person familiar with the matter.

Rules for that borrowing are still being developed under a 60-day time frame set by Congress when it approved the loans last month, an agency spokeswoman, Healy Baumgardner, told Bloomberg News.

The loans weren't designed to help in a merger, so such aid ``would be more appropriate for separate legislation,'' Baumgardner said.

The U.S. Chamber of Commerce sent letters last week to Energy Secretary Samuel Bodman, Paulson, Federal Reserve Chairman Ben S. Bernanke and members of Congress urging fast action on the loans and also to include automakers in the banking-system rescue, formally known as the Emergency Economic Stabilization Act.

Finance Units

``It's possible'' that U.S. automakers' credit units might receive assistance under the financial-industry bailout, Perino, the White House spokeswoman, said at a briefing. Cerberus bought a 51 percent stake of GMAC LLC, the former GM-owned auto and home lender, from GM in 2006.

GM and Chrysler have been expanding their planned payroll cuts to save money. Chrysler said last week it will trim 25 percent of its salaried workforce by year's end, or about 4,300 jobs, and GM said its salaried-employee reductions would exceed the previous target of 5,000.

Cerberus and Tokyo-based Nissan Motor Co. also have exchanged proposals about Chrysler, according to people familiar with the matter. Cerberus bought 80.1 percent of Chrysler from Daimler AG in 2007, and is negotiating to acquire the rest.

To contact the reporters on this story: Zachary R. Mider in New York at zmider1@bloomberg.net; Jeff Green in Southfield, Michigan, at jgreen16@bloomberg.net.

Last Updated: October 27, 2008 22:48 EDT