GE to ditch subprime loan unit?

According to what appears to be a single source, the WSJ has validated a Bloomberg story advising that General Electric (GE:NYSE) has hired Morgan Stanley to sell its Subprime Mortgage Unit.

“General Electric Co. plans to sell its subprime mortgage unit, which will effectively take the conglomerate out of the mortgage business in the U.S., according to a person familiar with the matter.

The person said GE, Fairfield, Conn., has retained Morgan Stanley to seek a buyer for the unit, known as WMC Mortgage. The person said GE planned to invest the proceeds in a higher-growth consumer-finance business.

GE took a $500 million pretax charge in the first quarter for losses on subprime loans. GE is expected to take an additional charge for subprime losses in the second quarter when it reports results on Friday.

GE sold off roughly $3 billion in subprime loans in the second quarter and has reduced WMC’s workforce by more than half.”

Pension funds are closing their private debt arms due to a lack of juice in the private placement debt market. GE is shedding its subprime business because the juice they sought turned sour. All while interest rates are starting to rise, spreads are moving wider, and the buyside is punching back on the cov-lite terms and conditions that were oh-so-acceptable a few months ago.

Are these merely signs that we are hitting the bottom?

Or is one of the world’s greatest conglomerates selling while there are (hopefully) still buyers to be found for their asset? Probably the latter.

MRM