According to one article from the UK banks are putting pressure on customers to solve their “debt problems” but the solution may be worse than the problem. HSBC learned from the US subprime problem, as loan officers told customers they could refinance into a better loan in six months or a year. Look at this report and see if the justification sounds more like Household International (HSBC Finance):
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Delta Financial Corp., the Woodbury-based subprime mortgage lender, filed for bankruptcy Monday, almost two weeks after announcing it would stop originating loans and file for court protection. Included in Delta’s list of its top creditors were subsidiaries of HSBC, KPMG and Deutsche Bank — all multinational banks that have lost hundreds of millions of dollars this year on bad mortgage investments.
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HSBC’s purchase of Household International was called a disaster. Other quotes included “total collapse of lending standards” at Household International. HSBC’s belief that its own lower funding costs would enable it to make a lot more money out of the Household International loans. Not realizing the acquisition would become a disaster, HSBC tried the same with other subprime lenders. HSBC bought entire companies, plus subprime packages from other banks. Unfortunately for HSBC the wings fell off and the idea came crashing to the ground.
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HSBC’s mortgage-related troubles may not be over, however. Goldman Sachs Group Inc. analyst Roy Ramos, wrote on November 24 that the bank may have to write down an additional $12 billion at its Household International Inc. unit. The bigger the banking institution, the bigger the clean up (excerpt). HSBC’s credit card business may also suffer. “Capital One is the best proxy for HSBC Finance Corp.’s credit card business, the single biggest product contributor to HSBC Finance revenue and profit”, ABN analysts wrote in an e-mail to clients.
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The annual report to State Attorney’s General has been published in our blog so our readers can see a breakdown of complaints on a state by state basis. It is in our complaints blog – a fitting home for this annual report. The report was mailed to the National Association of Attorneys General on December 12, 2007.
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We monitor customer trends for possible violations of Regulation Z and other possible illegal actions.
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