AK in Oregon sent this op-ed piece. We are publishing it here instead of in our complaints blog:
“HSBC- predatory lenders who slam insurance, offer over market rates and fees, and treat employees with disrespect.
Is this legal precedent that HSBC Finance should worry about? Rejecting the arguments of Countrywide executives and directors that they were unaware of lax loan operations that led to ballooning defaults, Judge Mariana R. Pfaelzer of Federal District Court in Los Angeles ruled Tuesday that she found confidential witness accounts in the shareholder complaint to be credible and that they suggested “a widespread company culture that encouraged employees to push mortgages through without regard to underwriting standards.”
Knight Vinke, the activist investor, launched a fresh attack on HSBC yesterday, accusing Europe’s biggest bank of flattering its US sub-prime losses by failing to write down $30 billion (£15 billion) worth of mortgage assets. Knight Vinke may have a point, as HSBC claims to have US losses under control, while almost every other economist says the worst is yet to come, the economy is in a recession, and foreclosures are at the highest rate since the great depression of 1939. Who is right?
An HSBC Finance employee advised us of this frightening move by HSBC, saying “As a current employee I am appauled to see Beneficial and HFC’s latest trick which seems to be avoiding federal caps on interest rates. As of May 5th they rolled out their new pricing sheets with rates set above the maximum Sect 32 rates set by the goverment. How can they do this? Simple - force customers to take “advantage” of their Pay Right Rewards system that lowers your interest rate by a whole .25% every year that you pay on time. This allows them to magically show you a much lower APR than the true rate you will be paying. The APR they show you assumes you will be keeping the loan for the full 30yrs and getting all 12 of the rate reductions.
One fact everyone knows about HSBC Finance Corporation, a subprime division of HSBC, is the company will not modify or change anything willingly. When HSBC says they modified 11,900 sub-prime mortgages, valued at $1.9bn, that were due to reset to punitively high rates this year it was not done willingly. HSBC Finance has its own method for punitively high rates for account holders. Whether it is an auto loan, credit card, or mortgage HSBC claims payments are late even if they are not.
More losses are now official for HSBC. In total, HSBC wrote off 5.8 billion dollars (2.9 billion pounds) in the three months to March as a result of losses linked both directly and indirectly to the subprime crisis which it said would very likely push the US economy into recession. The truth is HSBC and others helped push the US into a recession. The value of the dollar and tainted paper on secondary markets exacerbated the problem. When one looks at major banks involved with subprime one realizes the apple does not fall from the tree.
Analysts say that HSBC Holdings PLC (HBC) will again show large losses in the U.S., although these should be absorbed by stellar performance in Asia. Stellar, absolutely stellar. Except in the United States. As gasoline prices set an all-time record high many customers of HSBC Finance are finding it difficult to cope with loans. Often, by the selling agent’s own admissions, customers qualified for prime rate loans but were sold other products instead. Insurance against job loss, health problems, and whatever else could be packaged into the loan often compound the problem.
HSBC can submit as many press releases about planting trees, green offices, and gifts for credit card holders as they desire. Did HSBC ever think that those cute articles are negated by real news? For example, this article is quite astonishing: “Security-incident prone bank HSBC has admitted losing a server containing transaction data on 159,000 Hong Kong-based account holders.” An entire server? Next time if they want to lose a server they can send one to me.
Law firm Clyde & Cois is launching a case against HFC, a lender owned by HSBC, which sold payment protection insurance to 163,000 people between 2005 and 2007. Insurance packing in UK gets HSBC sued, as it did in the United States. Household Internaitonal, charged with predatory lending before HSBC purchased the troubled company, was the last finance company to stop the practice of insurance packing. - or so they said. Today we see United States admissions by HFC and Beneficial employees of insurance packing on home loans and other loans.
The theory is to snowball the court with fluff, chatter, a mountain of documents, and very boring testimony. Such was the case when HSBC and Decisioning tried to convince the court that Macy’s / Federated department stores held invalid patents. The appeals court saw it differently. The U.S. Court of Appeals for the Federal Circuit partly vacated summary judgments of noninfringement ruled in favor of TD Ameritrade Holdings Corp. and HSBC Holdings PLC cases versus Decisioning.com Inc.
An open letter to HSBC, Knight Vinke and Stephen Green
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