Report: U.S. rejects GM-Chrysler loan

DETROIT, Nov. 2 (UPI) -- The Treasury Department has rejected a request by General Motors Corp. for a $10 billion loan to facilitate a merger with Chrysler, The New York Times reported.

Citing people close to discussions about the request, the newspaper said Sunday that Treasury officials told GM Friday the Bush administration instead would accelerate a $25 billion loan program approved in September by Congress, intended to promote production of fuel-efficient vehicles.

GM and Cerberus Capital Management LP, the owner of Chrysler, have asked the government for a $10 billion loan that includes an equity swap. The deal would have the government take ownership of $3 billion of preferred stock in the company formed by a merger of GM and Chrysler, CNBC reported last week.

Cerberus has halted talks on a possible partial acquisition by Renault-Nissan, The Detroit News reported Saturday. Sources told the newspaper Cerberus prefers GM as a partner.

Treasury officials were reluctant to expand the $700 billion financial rescue program approved by Congress to cover industry or be involved in a GM-Chrysler merger, the Times said Sunday.

GM and Chrysler are still in talks on a possible merger, the report said.