GE to sell its sub-prime business

Sub-prime mortgage defaults are one of the big worries in the US

General Electric has decided to sell the WMC Mortgage sub-prime lending business that it bought in 2004.

"The mortgage industry has greatly changed since the purchase of WMC," said WMC's chief Laurent Bossard.

The sale was confirmed in GE's second-quarter results, which showed net earnings of $5.42bn (£2.67bn), up 9.6% from 2006.

Sub-prime lenders target borrowers who are less creditworthy, but the sector has seen defaults jump this year.

About 50 sub-prime lenders have been forced to close by the problems, which have also weighed on US share prices.

GE has already been cutting back on its exposure to the sub-prime market.

California-based WMC recently sold about two thirds of its sub-prime loans, worth about $3bn, and laid off more than 1,200 staff, leaving it with a headcount of about 700.