(Reuters) – General Electric Co will pay a $1.5 billion civil fine to resolve a long-running U.S. probe into defective subprime mortgages from its former WMC Mortgage unit prior to the 2008 global financial crisis.
FILE PHOTO: The logo of U.S. conglomerate General Electric is pictured at the company’s site of its energy branch in Belfort, France, February 5, 2019. REUTERS/Vincent Kessler/File Photo
The U.S. 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.
GE did not admit any wrongdoing in the settlement.
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.
The Justice Department said WMC overstated the quality of a majority of loans it packaged into residential mortgage-backed securities, and its fraudulent practices resulted in billions of dollars of investor losses.
Boston-based GE in January had announced an agreement in principle for the settlement and already set aside $1.5 billion. GE sold WMC in late 2007.
“This is another step in our ongoing efforts to