GE set to contest FHFA lawsuit

The Federal Housing Finance Agency has filed suit against 17 major U.S. banks alleging the financial institutions misrepresented the quality of mortgage-backed securities sold to Fannie Mae and Freddie Mac. General Electric said the suit against its former WMC unit is unfounded and the conglomerate will contest the lawsuit vigorously.

In a statement earlier this week, GE said the two transactions made by the financial institution that are in question amounted to $549 million and were paid down to $66 million in remaining principal. The conglomerate stated that Fannie Mae and Freddie Mac have received all interest and principal payments to date on the securities, and after 2007, WMC did not originate any new loans as the unit was sold off by GE.

The Wall Street Journal reported GE's finance unit, GE Capital, suffered massive losses during the financial crisis, but accounted for a third of GE's revenue in 2010. While the unit faces an uncertain future due to new lending regulations, it holds $605 billion in assets, making it a bigger institution than all but seven U.S. banks. 

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