As if subprime losses are not enough, big banks including HSBC know they are pushing the limit of credibility on credit card balances. Writeoffs are up 48 percent. The largest credit-card banks each set aside $1 billion to $3.5 billion in the third quarter for losses on card loans as their profits plummeted. The biggest credit-card lenders include Discover Financial Services, Bank of America Corp., Citigroup, JPMorgan Chase & Co., Capital One Financial Corp., American Express Co. and HSBC Holdings.
Looking back at the overall picture I believe William F. Aldinger knew Household International was an unsustainable business. Loaded with debt, consumers just cannot cope. Maybe Aldinger knew greed would create crazy mortgage vehicles like the ones responsible for market upheaval and bailouts. On the other hand maybe I give him too much credit.
Either way, Aldinger sold the business to HSBC, played around at the helm of HSBC North America Holdings, and took his millions when he left. HSBC is left with the remains. Mortgages tanked, credit card debt is in peril, subordinated loans are worthless, and auto financing is gone. Like selling a termite infested house to unsuspecting buyers, Aldinger scored a coup while HSBC watched the house fall down.
Related posts:
