General Electric Co. warned it might put its dormant subprime mortgage business, long-plagued by legal trouble, into bankruptcy protection.
A bankruptcy filing could be a way for the lender, WMC Mortgage, to deal with potential courtroom losses and other future liabilities, the company said late Tuesday in a filing with the Securities and Exchange Commission. A GE spokeswoman declined to comment beyond the filing.
GE
GE, -1.76%
recently set aside a $1.5 billion reserve related to a Justice Department investigation into the WMC Mortgage business, which stopped nearly all new loan originations in 2007.
WMC Mortgage was a large mortgage lender to people with low credit scores before the financial crisis. GE Capital Corp., the company’s finance unit, bought the subprime lender in 2004 and sold the operation’s assets in 2007 after racking up about $1 billion in losses in that year alone. Even though WMC Mortgage’s assets were sold, it is still part of GE Capital.
An expanded version of this report appears on WSJ.com.
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