GMAC, GE Will Cut 1,400 Job Cuts on Subprime Decline
It’s not just borrowers affected by the subprime loan fallout. GMAC's Residential Capital home lending unit and General Electric Co.'s WMC Mortgage division announced that they would cut more than 1,400 jobs due to the voluptuous meltdown caused by the rash of of defaults on subprime loans.
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“The subprime mortgage market is going to shrink by 75 percent in terms of jobs and volumes of origination,” Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California at Berkeley, told Bloomberg.com. “These companies got too big. They were giving people loans they shouldn't have and now they're getting rid of all that.”
RecCap spokeswoman Gina Proia said in a statement that the reductions at GMAC are the result of “current market conditions and the deterioration of the U.S. mortgage market.”
According to Bloomberg data, more than 50 subprime lenders have halted operations, gone bankrupt or sought buyers since the start of 2006.
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