Struggling US carmaker Chrysler is fresh from presenting its three brands, that comprise of Chrysler, Dodge and Jeep, at the 79th Geneva Motor Show this month.

The US Treasury Department is still open minded about whether it will approve the proposed alliance between Chrysler LL and Fiat according to the top official leading the Obama administration's auto task force.

"We need to understand better where Fiat is at and whether that is potentially a realistic deal or not before we know where to go next on that one," Steve Rattner told The Detroit News in an interview yesterday. Rattner is leading a team that is trying to find a solution to the deep financial difficulties that Chrysler and General Motors find themselves in. The US government has already pumped US$17.4 billion in emergency loans in recent months to prop the two carmakers up and is looking for a way to make the firms viable.

Chrysler is currently seeking an additional US$5 billion to keep the its afloat in the short term and receiving this additional cash is key to the deal with Fiat going ahead. However Rattner was cautious about the possibility of more loans, telling The Detroit News that "we're not going to put these companies on some kind of indefinite intravenous drip feed of money; we need to come out of this with something that makes sense." Ten days ago Fiat Group CEO Sergio Marchionne was closely questioned by the auto task force as he put the case for the Fiat deal.

Rattner said his team was still scrutinising the outline recovery business plans that were put forward last month by Chrysler and GM, although he declined to offer any opinion on whether he thought they were realistic propositions. The government could take risks that the private sector would not, he said. "We don't have to necessarily look at the government's money the way when I was a private equity guy I would have looked at private equity money," said Rattner. "We can bend and twist with the government's money to try to facilitate a goal that has both public and private objectives, but it's got to fit within a box. It can't be a black hole. It's got to make some sense."

The proposed deal would see Fiat gaining a 35 percent stake in Chrysler in exchange for supplying its efficient engine technology and smaller platforms. Fiat would be given the option of raising this stake to 55 percent for a nominal sum. Currently Chrysler LLC is 80.1 percent owned by Cerberus Capital Management LP, a New York private equity firm, with the balance being held by its former owners, Daimler. Cerberus has not contributed any additional funding to the ailing company and has no plans to.