Household HSBC Watch

Carrick MollenKamp of the Wall Street Journal follows HSBC closely. His recent article “HSBC a canary in US mortgage mine” appeared on 12 November. It is interesting to note that HSBC helped to start the entire worldwide credit crisis. “…HSBC said souring sub-prime-mortgage loans had forced the bank to add nearly $US2 billion of its funds set aside for 2006 to cover bad debts. At the time, HSBC was alone among big commercial and Wall Street banks in signaling big problems. At about the time of HSBC’s statement, though, lender New Century Financial Corp. said it expected a fourth-quarter loss, helping set off a stock-market rout.”

Mr. MollenKamp said what advocates at Household - HSBC Watch already knew. Trend analysis allows us to monitor day-to-day reports and complaints while analyzing quarterly reports by HSBC to the SEC. While commentary in our blog may wait for second party confirmation, one doesn’t need confirmation to know when the numbers don’t add up.

HSBC has a big problem. Household International, now called HSBC Finance, is but one part of the problem. Second mortgages are starting to go bad but such loans have a subordinate position, allowing HSBC little protection unless they also hold the first mortgage. HSBC’s credit card operation could take a big hit. Some analysts expect the losses at HSBC Finance to prompt a slowdown in lending at its 1,260 US branches and other lending outlets, which provide mortgages, auto loans and credit cards to retail customers. That is an area that economists have been watching closely for signs of contagion from the credit crisis. Any pullback in such lending could curtail US consumer spending, which has been the country’s main driver of economic growth.

Recently people around the country have Googled “HFC layoffs” and Beneficial layoffs”, suggesting they may know something. People on this blog have rated HSBC credit cards with a 70 percent disapproval rating. Complaints about shady “late payments” are received daily, and each complaintant is urged to report the suspect payment processing to their state attorney general. Some analysts suggest HSBC Finance (Household International) is ready to implode. No doubt those who lost their homes to Household’s predatory lending, still unsatisfied with a nationwide $484 million settlement, will cheer if that happens. Don’t forget that the U.S. Supreme Court upheld racketeering charges against HSBC and tax preparer H&R Block.

As HSBC fans browse our complaints blog for the purpose of ridiculing those who were told their payments were late, one in particular likes to tell those people to take responsibility for being late. Shea vs Household, settled by HSBC since HSBC owned Houshold for two years by settlement time, suggests a different story. Perhaps HSBC should take responsibility for a systematic scam of applying payments as late payments. Showing a systematic pattern in court of doing so from 1994 through 2004 is not enough for some. Common sense and daily complaints tell us HSBC Finance is still doing what they were told not to do. So much for taking responsibility. Perhaps another $10 million fine is small change? HSBC is allowing HSBC Finance to throw HSBC Plc’s reputation down the drain. Others say that is not enough for HSBC Finance, as they might have poisoned overall U.S. economic growth.

By the way you can see Mr. MollenKamp’s complete article here.