Dec. 7 (Bloomberg) -- Senate Banking Committee Chairman Chris Dodd said General Motors Corp. Chief Executive Richard Wagoner should be replaced as a condition for federal aid and Chrysler LLC may have to merge to survive.

“You’ve got to consider new leadership,” Dodd said on CBS’s “Face the Nation.” Wagoner, he said, “has to move on.”

GM spokesman Steve Harris said he didn’t interpret Dodd’s comments as making Wagoner’s exit a condition for aid, adding that the company management, employees and dealers “all feel like Rick is the right guy to lead us at difficult time.”

Lawmakers are putting together a $15 billion plan intended to help keep GM and Chrysler afloat and negotiations are underway between congressional Democrats and the Bush administration over what conditions for restructuring will be required. The House and Senate are returning this week specifically to consider the measure.

At least some GM board members would be willing to leave if it were a requirement of Congress for receiving aid, said a person familiar with GM board deliberations.

President-elect Barack Obama, asked on NBC’s “Meet the Press,” whether the management of the automaker should be allowed to stay, said “it may not be the same for all the companies.”

Press Conference

Later, at a press conference in Chicago, Obama said that if the management team “that’s currently in place doesn’t understand the urgency of the situation and is not willing to make the tough choices and adapt to these new circumstances, then they should go.”

“If, on the other hand, they are willing, able and show themselves committed to making those important changes, then that raises a different situation,” Obama said.

Dodd said that GM is in the “worst shape.”

“Chrysler, is, I think, basically gone, probably ought to be merged,” Dodd said. Ford Motor Co. is the healthiest domestic automaker, he said.

Chrysler spokeswoman Lori McTavish said it would be “inappropriate for the company to comment on the speculation.”

“We are completely focused on securing a working capital bridge loan for Chrysler,” she said.

Senate approval of the legislation remains in doubt, some lawmakers said.

Alabama Republican Senator Jeff Sessions said he has “doubts it will pass, but it’s a lot closer than it was” when automakers were asking for $34 billion.

Filibuster Threat

Senator Richard Shelby of Alabama said he supports a filibuster, a procedural tactic which stalls legislation to allow endless debate. Sixty votes are needed to end filibusters.

“I think we need to debate it and that’s what filibusters allow and this week would be a good time to do it,” Shelby said.

He called the auto bailout “a bridge loan to nowhere,” on the “Fox News Sunday” program today.

Dodd warned that a filibuster “may be the end” of efforts to aid automakers until the next session of Congress in January.

Michigan Senator Carl Levin, a Democrat who supports aid to the automakers, said on “Fox News Sunday” that he expects lawmakers to finish writing legislation in the next 24 hours to loan money to the automakers.

“Obviously that’s a much more complicated question as to whether the votes are there,” Levin said. “What I’m confident of is that the bill will be introduced.”

Dodd said that “the votes are there” for a carmaker bailout.

“Even if people don’t like this idea, none of us want to wake up Jan. 1 and discover we don’t have an industry to save,” Dodd said.

The chief executives of GM and Chrysler testified at hearings this week that they need a combined $14 billion to keep operating through March 31.

“The last thing I want to see is the auto industry disappear,” Obama said. Still, he added that any loans or assistance must be tied to restructuring of the companies.

To contact the reporter on this story: Lorraine Woellert in Washington at lwoellert@bloomberg.net.

Last Updated: December 7, 2008 16:21 EST