GE to Sell Its Subprime Unit
As Losses Continue to Mount
by Kathryn Kranhold
From The Wall Street Journal Online
July 16, 2007
General Electric Co. plans to sell its subprime-mortgage unit, which will effectively take the company out of the mortgage business in the U.S., according to a person familiar with the matter.
The Fairfield, Conn., conglomerate has retained Morgan Stanley to seek a buyer for the unit, known as WMC Mortgage, and is planning to invest the proceeds in a higher-growth consumer-finance business, the person said. The planned sale was earlier reported by Bloomberg.
GE took a $500 million pretax charge in the first quarter for losses on subprime loans. The company is expected to take an additional charge for subprime losses for the second quarter when it reports results today.
GE sold off roughly $3 billion in subprime loans in the second quarter and has reduced WMC's work force by more than half.
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