Household HSBC Watch

Tue Mar 01, 2005 7:41 pm      

As reporters, investigators and investors try to make sense of why John Bond called for William Aldinger's early retirement these key issues shed some light on the subject. Shown here are too many incidents to overlook. The reader gets the impression that John Bond was embarrassed and ignored too many times.

Wishful thinking:
November 15, 2002 - “HSBC Chairman John Bond says he is
confident regulatory issues have been resolved. ” Bond was
speaking about Household International just before HSBC
purchased the troubled predatory lender.
The Embarrassment:
In the summer of 2004 the Shea v Household Lawsuit alleges that
Household imposed certain finance charges, late fees, and overlimit
fees between October 20, 1994 and March 18, 2004 that were not
authorized by Household’s credit card agreements and were in
violation of state law. Cost to Bond's company - US$11 million.

Wishful thinking:
HSBC is confident that Household is in compliance and more compliance
officers have been added.
The Embarrassment:
"As of 4 days ago, I have in writing as an employee, a document from
Retail Services upper management advising us to process any
application or joint application addition -- even if it does not have
any signature or indication of photo ID. This is in violation of the
Patriot Act."

Wishful thinking:
Your HSBC Personal Internet Banking benefits include FREE online Bill
Pay for all Personal Internet Banking users, View your account
balances and transactions, Transfer funds between your HSBC accounts
quickly...
The Embarrassment:
Andrew Armishaw, group executive and chief information officer at
HSBC has some explaining to do. Consumers have reported in recent
weeks (2005) that HSBC’s online payment website, www.hrsaccount.com ,
will not let customers pay their accounts online. The number of
complaints about the online payment website rose to an all time high
in recent weeks. (2005)

Wishful thinking:
An article in 2002 comments this is an "unusual transaction", that
only last month (October 2002) Household was found guilty of
predatory banking and borrowing practices and deceiving consumers.
Household has also restated earnings covering fraudulent banking
records. England's bank says "not to worry - Household has dealt
with this problem effectively" and that now Household can "draw money
from the HSBC deposit base". England's bank says this is
a "fantastic opportunity to buy a franchise in America.
The embarrassment:
Washington, D.C., March 19, 2003 — The Securities and Exchange
Commission has entered an Order Instituting Public Cease-and-Desist
Proceedings, Making Findings, and Imposing Cease-and-Desist Order
Pursuant to Section 21C of the Securities Exchange Act of 1934
finding that Household International Inc. violated the antifraud and
reporting provisions of the Securities Exchange Act of 1934.
Household consented to the entry of the Order without admitting or
denying the findings of the Commission. The SEC said Household was
rolling over US$1 Billion of bad loans every month.

Wishful thinking:
Excerpt from and interview in The Banker: “Household has the
opportunity to be a benchmark of quality. We want it to be a
responsible business helping set the standard for the industry” newly-
appointed chief executive Mr. Stephen Green said when presenting HSBC
group’s results for the first time in August."
The embarrassment:
Jan 11, 2005
NEW YORK, Jan. 10, 2005 (PRIMEZONE) -- The law firms of Kirby
McInerney & Squire, LLP and Levy Angstreich Finney Baldante,
Rubenstein & Coren, P.C. announce that the United States Supreme
Court today denied defendants' petition to review the certification
of a nationwide class asserting federal Racketeer Influenced and
Corrupt Organizations Act (``RICO'') claims against H&R Block, Inc.
(NYSE: - ) and Household International, Inc. (successor to Beneficial
Corporation), now a subsidiary of HSBC... The suit shall therefore go
forward against Block and HSBC - Household.

Wishful thinking:
From the Financial Times of December 24: “Household has faced
accusations of predatory lending from consumer groups but Sir John
Bond attributes Household's problems to ‘one or two rogue branches.’”
The embarrassment:
Perhaps the easiest rebuttal is the fact that dozens of U.S. states
sued Household for predatory lending, in 2002, and the company
settled. Old Sir John apparently hasn’t read those court papers, nor
the subsequent voluminous documentation of ongoing predatory lending
at Household. He either doesn’t know or doesn’t care, or both.

Wishful thinking:
HSBC claims that it does not make political campaign contributions,
that this is one of its “best practices.” (The claim is made in
HSBC's "corporate responsibility" statement). From Bloomberg on
March 3, 2004: HSBC Holdings Plc Chairman Sir John Bond halted
direct political contributions in the U.S. by Household International
Inc. six months after buying the company.
The embarrassment:
As reported by Crain's Chicago Business of November 8, 2004: “At
Prospect Heights-based HSBC North America Holdings Inc. (formerly
Household International Inc.), PAC contributions have almost doubled
since 2000 to nearly $1.5 million. Last year's acquisition by London-
based HSBC Holdings Plc doubled the number of eligible contributors
in the U.S. But the growth spurt really started during the 2002
election cycle, after the company decided to use its PAC for state-
level contributions because direct corporate contributions
were 'going by the wayside,' says Micaela Isler, HSBC's political
director.” Household has stepped up its efforts with a customized
intranet site that includes a letter from William F Aldinger.

Wishful thinking:
From HSBC: "We've done our due diligence. We did what we thought
was necessary and appropriate." (December 13, 2002, Douglas Flint
conference call.)
The embarrassment:
HSBC North America Holdings did not stop the practices alleged in
Shea v Household, including the practice of crediting customer
payments late to increase their profitability. The practice started
under Aldinger and Household International, continued after HSBC did
due diligence, and they were sued as Aldinger was chairman and chief
executive officer of HSBC North America Holdings Inc. In March 2005
the practices continue.

Wishful thinking:
In 2002, in front of his own people in London Kentucky, William
Aldinger made the comment at the annual meeting "we do not practice
predatory lending."
The embarrassment:
Two months later the stock price dropped as a nationwide $484 million
predatory lending settlement was announced.

Wishful thinking:
From HSBC's Stephen Green "We want Household to be a responsible
business helping set the standard for the industry."
The embarrassment:
Found on Household - HSBC Watch, earning the quote of the year for
2004, from a Household employee at their London Kentucky
facility: “The consumers with their complaints are the pieces of s**t
that do not know how to manage money. Get an education and use it.
Stop buying things and using credit cards. Invest in some real estate
and drive a crappy car through your pitiful lives. At least you will
retire thinking you accomplished something.” In 2005 another
employee, from behind the Household International firewall, used a
company computer on company time to infuriate a web visitor who's
home was foreclosed upon by HSBC.

Wishful thinking:
That one or two consumer advocates (Acorn and Household - HSBC Watch) would lose interest after HSBC acquired Household.
The Embarrassment:
Both advocates are unrelenting. Acorn wrote a book. Household -
HSBC Watch wrote a lesson plan for educators called "The History of
Predatory Lending With an Emphasis on Household International and
HSBC Finance Corporation." Household - HSBC Watch stepped up their
task force to 24 hours a day, with online help center live and
telephone hotline.