GE Plans to Sell Subprime Mortgage Unit

General Electric has decided to sell its WMC Mortgage subprime lending business, the lender told employees in a memo Thursday.

"The mortgage industry has greatly changed since the purchase of WMC," wrote Laurent Bossard, president and chief executive of WMC, in the memo to employees. "The current sub-prime market environment has made a significant negative impact on the business."

The memo said GE would disclose the plan in a conference call Friday when it is due to report second-quarter financial results and that Morgan Stanley had been selected to advise on the deal.

A spokesman for Fairfield, Connecticut-based GE declined to comment.

Defaults in the subprime lending market, which focuses on less-creditworthy borrowers, have surged this year, causing about 50 subprime lenders to close.

Burbank, California-based WMC, which GE bought in 2004, has been a thorn in the conglomerate's side in recent months. The lender cut back sharply on new loans and laid off more than 1,200 staffers, cutting its head count to about 700.

In the second quarter, WMC sold off about $3 billion in non-prime loans, cutting its exposure to the market by about two-thirds.

GE is the parent company of CNBC.

Contact U.S. News


    Get the best of CNBC in your inbox

    To learn more about how we use your information,
    please read our Privacy Policy.
    › Learn More

Don't Miss

U.S. Video

  • Senate Armed Services Committee Chairman John McCain tells CNBC he thinks filmmaker Michael Moore's statements about the movie "American Sniper" were "idiotic."

  • Ethan Harris, Co-Head of Global Economics Research, BofA Merrill Lynch Global Research, says the Fed could raise rates in the second half of this year. The Fed must look at inflation and the unemployment rate, he says.

  • Alan Ruskin, Global Head of Group of 10 Foreign Exchange Strategy, Deutsche Bank AG, discusses whether the dollar is actually too strong and whether that could hurt the US economy in the long run.