In 2003 consumer advocates at Household - HSBC Watch knew nothing of Knight-Vinke and Eric Knight. The organization was known only as Household Watch. But just this morning HSBC might be planning more acquisitions in the United States. “We may consider acquiring banks linked to Spanish and Asian communities,” the South China Morning Post quoted HSBC’s chief executive, Michael Geoghegan, as saying. Having studied Household International for over 10 years, Household - HSBC Watch simply says those communities should be careful.
Regulators, investigators, and Homeland Security should also be leery. As HSBC moves into developing nations the obvious tie-in is to target those communities in the United States, thus allowing cash to flow to and from Spanish and Asian countries. HSBC has a weak record on money laundering. The first thing HSBC will tell U.S. regulators is exactly what HSBC said a few years ago. “Regulations in other countries forbid HSBC from disclosing information…” could be heard again.
Who is the loser in this game? HSBC Finance - formerly Household International - is America’s expert in passing the blame while playing regulators against themselves. Starting at the top, HSBC says it is not a federal regulatory problem, but state regulated. At the state level HSBC stalls investigators, and tries to send them back to the Feds. Failing that, they claim individual complaints should go to city, county, or state offices. Optimal landing zones for complaints, under the existing system, would be the FTC or a local Better Business Bureau. We guarantee nothing will happen. Even if the complaint lands at the OCC, nothing will happen under today’s regulatory system. The OCC is funded by major banks such as HSBC.
Mr Knight of Knight-Vinke said in a letter this past weekend: “HSBC could have been spared the predicament in which it now finds itself had the board not brought these problems upon itself by approving the acquisition of Household International (now HSBC Finance, or HFC) in 2003.” He added: “Given the huge sub-prime related losses incurred by HSBC in recent months and the even greater losses incurred by its shareholders as a result, we believe it to be entirely appropriate to be thinking constructively about improvements in strategy and governance at this time.”
What Knight-Vinke should realize is that HSBC Plc, HSBC USA, and HSBC Finance pushed regulators to the breaking point. Years of consumer abuse should be stopped immediately by denying HSBC’s new acquisition and expansion plans unless HSBC divests itself of HSBC Finance. Othewise, HSBC cannot be trusted. Another nationwide lawsuit and settlement seems inevitable, but of course the settlement will be very small compared to HSBC Plc’s hourly earnings. However, that is not the point. Reputational risk and public perception will suffer. Today’s perception is that HSBC wants to be a third world bank, catering to areas where regulations are less stringent. HSBC has no stringent quality requirements outlining what is acceptable.
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[...] HSBC has no stringent quality requirements outlining what is acceptable HSBC has no stringent quality requirements outlining what is acceptable In 2003 consumer advocates at Household - HSBC Watch knew nothing of Knight-Vinke and Eric Knight. The organization was known only as Household Watch. But just this morning HSBC might be planning more acquisitions in the United States. “We may consider acquiring banks linked to Spanish and Asi… Read the full post from Household HSBC Watch Tags: 2007 HSBC via Blogdigger blog search for sub+prime. [...]
[...] HSBC has no stringent quality requirements outlining what is… …of Household International (now HSBC Finance, or HFC) in 2003.” He added: “Given the huge sub-prime related losses incurred by HSBC in… [...]