It hard to believe that HSBC Holdings PLC ADS was selling for around $82 per share as recently as October 2008. The 52 week range reflects a high of 88.15 and a low of 25.05. Today, March 5, 2009, the share price is down again, at 26.34.
Now that HSBC shut down HSBC Finance, formerly known as Household International, many people thought HSBC’s stock would rally. The bank said it needs no money from US or UK bailout programs.
Market jitters reflect overall poor economic performance, coupled with lower global profits to offset losses in the United States. Shutting HSBC Finance, with the exception of the credit card division, does not immediately stop losses. Further write-downs are expected.
HSBC Credit Card Holders See Abuses
HSBC credit card customers are experiencing severe cuts in credit limits as cardholders lash out at HSBC. Cardholders were not notified and most found out about changes when trying to use the card or when making a payment.
Complaints about HSBC credit cards may give new life to investigations of late payment processing. As part of a combined class action suit in 2003, HSBC paid approximately $10 million to settle allegations that payments were processed as ‘late payments.’ A judge combined four class actions suits, including Shea v Household before allegations were settled.
All of the suits were carried over to HSBC from Household International. Late payment processing involved the period from 1994 through 2004. HSBC bought Household International in late 2002, and closed the deal in early 2003.
Was Your Payment Really Late?
Monitoring complaints since the settlement, many customers believe HSBC continued the practice of telling customers their payments were late. Calculating the large number of $39 late payment fees HSBC is believed to have received, another fine would be offset by huge profits.
U.S. bankruptcy filings surged 31 percent in 2008 as both businesses and consumers struggled to make ends meet in a worsening economy, according to court data released on Thursday. Some customers saw credit card balances spiral out of control while HSBC continued to add fees that were, in some cases, unwarranted.
Most credit card holders are restricted to binding arbitration and thus feel powerless to challenge HSBC. Regulators and state Attorney’s General have not revisited the case nor has there been any follow-up to verify that HSBC discontinued the practice of crediting payments as late payments.
As HSBC reduces credit limits for creditcard holders, over-limit fees are also assessed. Even without excessive over-limit and late fees, FICO scores are effected because the ratio of available credit to unused credit is severely impacted.
No Credit Card Bill of Rights For HSBC
As HSBC continues to drop credit limits and FICO scores across the nation, complaints are increasing to previously unheard of levels. A credit card bill of rights would effectively stop HSBC from sending statements one day before the due date.
Obama and Biden will establish a five-star rating system so that every consumer knows the risk involved in every credit card. They also will establish a Credit Card Bill of Rights to stop credit card companies from exploiting consumers with unfair practices.
Obama and Biden will create a credit card rating system, modeled on five-star systems used for other consumer products, to provide consumers an easily identifiable ranking of credit cards, based on the card’s features. Credit card companies will be required to display the rating on all application and contract materials, enabling consumers to quickly understand all of the major provisions of a credit card without having to rely exclusively on fine print in lengthy documents.
Obama and Biden will create a Credit Card Bill of Rights to protect consumers. The Obama-Biden plan will:
· Ban Unilateral Changes
· Apply Interest Rate Increases Only to Future Debt
· Prohibit Interest on Fees
· Prohibit “Universal Defaults”
· Require Prompt and Fair Crediting of Cardholder Payments
Clearly HSBC sees this initiative as a challenge to profits. Lawmakers differ on how long it should take to put a Credit Card Bill of Rights into effect. While some argued for two years, others said six months should be adequate.
Consumers and activists say cardholders would be sitting ducks for abuses between passage of the law and the actual time it went into effect. Clearly that turned out to be true, as evidenced by HSBC actions.
Brendan McDonagh Says Business As Usual
Brendan McDonagh, Group managing director, CEO of HSBC North America Holdings, and former chief operating officer of HSBC Bank USA said today that it’s business as usual for HSBC. Of that there is no doubt, as HSBC continues to push the limits of the law, abuse customers, and reduce FICO scores across America. Many of these HSBC customers pay their account in full every month, and have FICO scores between 700 and 800, with unblemished credit.
Rape is defined as despoiled: having been robbed and destroyed by force and violence; “the raped countryside.” That definition applies to HSBC credit card operations as it relates to cardholders. No warning, violent results, resulting in anger, without remorse, leaving shocked victims in the wake of destruction.
I do not have HSBC credit cards. My credit card companies are professional. They have not dropped my credit limits. They apply my payments in a timely manner. What is wrong with HSBC? HSBC’s loyalty is to HSBC and nobody else. When HSBC looks for good solid bank customers where will the bank find them?
If this is an exit strategy for HSBC to leave the United States it certainly is working. Sell the bank branches, move HSBC North America to Canada, and get out.
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