Chrysler U.S. gov't loan bid could be in jeopardy

WASHINGTON, Sept 15 (Reuters) - Republican leaders in the House of Representatives want to halve the balance of a U.S. government loan fund established to help the auto industry make more fuel efficient cars and trucks.

If plans to shift some $1.5 billion from the Energy Department advanced technology fund to disaster assistance are carried out, serious questions would be raised about Chrysler's ability to fully capitalize on its bid for new financing.

The automaker, which is run by Italy's Fiat (FIA.MI), has already refinanced its bank debt and has been working with the Obama administration this year to finalize terms of its $3 billion application for technology loans.

House Republican Leader Eric Cantor said the government needs to prioritize spending, including identifying unspent funds to help meet current needs.

"We're trying to face facts. We must stop the federal government from continuing to spend money it doesn't have," Cantor said on the House floor. "The money has been laying around since September 2008."

His Democratic counterpart, Steny Hoyer, said the loan money was ticketed to help create thousands of jobs in the auto sector.

"If you target this particular fund, you are targeting a fund that has grown jobs in America," Hoyer said without mentioning Chrysler's loan application.

Ford Motor Co (F.N) and Japan's Nissan (7201.T) are the only major automakers that have received similar financing. Chrysler and General Motors Co (GM.N) were bailed out by the Bush and Obama administrations in 2009.

GM had applied for DOE financing but withdrew its application, saying it could pay for its own initiatives to retool factories for making more fuel efficient vehicles.

(Reporting by John Crawley, Bernard Orr)