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General Electric announced another restructuring of its troubled finance unit, and says job losses are likely.

Until this year, GE Capital was a major engine of growth for the Fairfield based conglomerate, but in the midst of the credit crisis it’s now an Achilles heel – its earnings fell 38 percent in the third quarter.  GE told investors Tuesday that it would shrink the operation, quitting some of its business lines, and changing its structure so as to be less reliant on short term credit.  CEO of GE Capital Mike Neal told a conference call this is the most challenging business environment he has faced in his career, but he’s confident about the company’s future.

“We’re convinced that we can be a well funded yet smaller finance company.  We can be competitive, safe, with a much more diversified funding model.  We believe that we are participating in the appropriate government programs that we need that level the playing field for us, and doing that without the need to become a bank holding company.”

Meanwhile, GE as a whole lowered its financial forecast for the third time this year, warning investors that it will hit the lower end of its previous guidance in the fourth quarter.  Despite this, GE’s shares rose 14 percent to close at $17.61.