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GE pays $1.5 billion to finally resolve subprime loan allegations

Posted: 4:19 AM, Jan 31, 2019
Updated: 2019-01-31 07:19:35-05

General Electric's power business keeps crumbling, but the beleaguered company put to rest a major question mark by reaching a $1.5 billion settlement with the Justice Department.

GE announced on Thursday that its adjusted profit declined more than Wall Street analysts had been anticipating. The latest stumble was driven by an $872 million loss at GE Power, the company's turbine division.

But GE is finally moving past its decade-old subprime disaster. The company agreed to pay a $1.5 billion civil penalty to settle the DOJ's investigation into WMC Mortgage, the subprime lender that was shut down a decade ago. GE previously set aside that amount.

GE shares climbed another 3% in premarket trading.

"We have more work to do, but I'm encouraged by the changes we're making to strengthen GE and create value for our shareholders, customers, and employees," CEO Larry Culp said in a statement.

After a horrendous 2017 and 2018, GE shares have spiked 20% this year on hopes that the worst is over. Although GE is still worth just a fraction of its all-time high, it's one of the best performing stocks in the S&P 500 in 2019.

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