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The Wall Street Journal: GE warns its subprime morgtage unit, WMC, may declare bankruptcy

General Electric Co. warned it will put its dormant subprime mortgage business, long-plagued via criminal trouble, out of business protection.

A bankruptcy filing is usually a manner for the lender, WMC Mortgage, to deal with potential courtroom losses and different future liabilities, the corporate stated late Tuesday in a filing with the Securities and Exchange Commission. A GE spokeswoman declined to remark past the filing.

GE GE, -1.76%  recently put aside a $1.5 billion reserve associated with a Justice Department investigation into the WMC Mortgage business, which stopped just about all new loan originations in 2007.

WMC Mortgage used to be a large mortgage lender to people with a bad credit score rankings prior to the monetary disaster. GE Capital Corp., the corporate’s finance unit, bought the subprime lender in 2004 and bought the operation’s assets in 2007 after racking up about $1 billion in losses in that yr by myself. Even though WMC Mortgage’s assets have been bought, it's still part of GE Capital.

An expanded version of this report appears on WSJ.com.

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