GE to pay $1.5 billion US civil fine over subprime mortgages

General Electric will pay a $1.5 billion civil fine to resolve a long-running US investigation into defective subprime mortgages offered by its former WMC Mortgage unit prior to the 2008 global financial crisis.

The US Department of Justice on Friday said the accord resolves claims that GE concealed the poor quality of the loans and WMC's lax fraud controls when packaging the loans into residential mortgage-backed securities sold to investors.

WMC was acquired by GE's finance unit General Electric Capital Corp in 2004, and originated more than $65 billion of mortgage loans in the next three years.

GE had in January announced an agreement in principle for Friday's settlement, and had previously set aside $1.5 billion for the accord. The Boston-based company did not admit wrongdoing in agreeing to settle.

"This is another step in our ongoing efforts to de-risk GE Capital," GE said in a statement. "This agreement represents a significant part of the total legacy exposure associated with WMC and we are pleased to put this matter behind us."

Reuters