Oct. 28 (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.

Wagoner, 55, was in Washington yesterday and also met last week with Treasury Department officials, 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.

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.

``The automakers have been in contact with us,'' Dana Perino, a White House spokeswoman, told reporters today at a briefing in Washington. ``We're trying to work with them at various levels'' within existing programs. She said she couldn't confirm that GM requested $10 billion in aid.

`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 rose 80 cents, or 15 percent, to $6.25 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have tumbled 75 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 yesterday, 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.

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 yesterday. 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.

A government bailout for U.S. automakers is a ``bad idea,'' Stephen Pope, chief global market strategist at Cantor Fitzgerald Europe, said today in a Bloomberg Television interview.

``American automakers have been there since 1950 seeing their market share decline and sat and did nothing about it,'' said Pope, who is based in London. ``Now they're really up against sort of a hard place, and they are squealing and they want a government bailout. No.

``It will happen because nobody wants that amount of unemployment on their books but generally speaking, they don't deserve a bailout,'' Pope said.

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 28, 2008 16:34 EDT