The U.S. Postal Service wants to strike another deal to offer discounts to boost first-class mail volume and save money by destroying rather than returning a company’s undeliverable mail. The negotiated service agreement with financial services company HSBC North America Inc. of Prospect Heights, Ill., would be the fourth such agreement proposed by the Postal Service. The first agreement, with credit card company Capital One Services Inc. of McLean, Va., generated $21.7 million in savings and revenue in its first year for the Postal Service.
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Another of troubled predatory lender Household International and HSBC’s merchants, CompUSA Inc., has agreed to settle a government complaint charging the company with deceiving consumers who bought computer products but failed to receive promised cash rebates from $15 to $100 each, the Federal Trade Commission said Friday March 11, 2005. The FTC said CompUSA falsely represented to customers who bought QPS products that rebates would be paid within six to eight weeks, but it said some customers waited up to six months or never received money. It also accused CompUSA of continuing to advertise QPS rebates despite knowing about these serious delays, up until QPS filed for bankruptcy protection in August 2002.
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HSBC has been criticized by some analysts for the purchase of Household. Merrill Lynch & Co. and at least six other brokers cut their 2005 earnings estimates for HSBC on March 1, a day after the bank reported the slowest earnings growth in 2 1/2 years as earnings from consumer lending in the U.S. declined. “The future, for the near term at least, remains weak,” said Peter Toeman, an analyst at Morgan Stanley in London in a note to clients on March 1. “Household’s profits will decline.”
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Peter Eavis wrote on 3/10/2005: “History shows again and again that lending companies that use punitive tactics don’t do well over time. Two good examples come to mind. First, the old Conseco, which charged insufferably high interest rates on loans for mobile homes. The company filed for bankruptcy in late 2002 primarily because of problems in its lending arm. Second, there was Household International, a huge and often ruthless consumer lender that ended up getting bought by the U.K.’s HSBC Holdings…” Eavis also said “Regulators also dislike negative amortization because it also helps banks mask the true level of bad loans. If borrowers had to make minimum payments that were high enough to actually pay down their balances, many of them would default because the payments would be too high. In the buoyant credit environment of the past seven years, bad loans haven’t been a big problem, but a crunch could be far worse than expected at a lender that has a lot of loans on its books with negative amortization.”
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The following was sent to the OCC and FBI on behalf of consumers:
Office of the Comptroller of the Currency
1301 McKinney Street
Suite 3450
Houston, Texas 77010-9050
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