UBS tried to explain subprime losses in a 50 page report. One glaring fact that stands out is a huge risk for HSBC, since HSBC did little or nothing to change HSBC Finance. UBS Said in part: “… its compensation structure for employees provided “insufficient incentives to protect the UBS franchise long-term.”" In other words when employees are rewarded with a ‘pay for perfomance’ compensation structure, the company loses, customers lose, and risks go out the window. That is exactly how HSBC rewards employees of HSBC Finance, parent or HFC and Beneficial.

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As litigation and suits begin in the subprime arena, websites like Mortgage Blues added discussion areas specifically for suits and settlements. Now you can add Burns & Levinson LLP to the list of law firms that has added a subprime practice to deal with the fallout of the collapse of the subprime loan industry. Boston-based Burns & Levinson has formed a subprime advisory team to advise investors, brokerages, fiduciaries and businesses whose investment portfolios and credit arrangements have been significantly disrupted, according to the firm.

This quote, which is on the public record, is taken from Alan Greenspan’s testimony before the Committee on Financial Services, U.S. House of Representatives, July 20, 2005:

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Shares of Talbot’s Inc. were battered early Wednesday following its disclosure that HSBC is no longer prepared to continue making letter of credit facilities available to the company. A letter of credit essentially substitutes the credit of a third party (usually a large bank) for that of a borrower. Did HSBC Finance attempt to sign Talbots under HSBC Finance Corporation’s merchant program? Is this a result of Talbots only accepting Visa, MasterCard, Discover and American Express? Did Talbots turn down HSBC’s merchant account program? If so we fully understand, since other HSBC merchants have been immediately classified as troubled merchants. Otherwise they would have signed a merchant agreement with somebody else.

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We wonder why HSBC is raising credit card interest rates for some customers. No information is given, other than “it was a business decision.” Others call it predatory lending - a term that HSBC Finance (formerly Household International) is very familiar with. The federal government lowered the interest rates to a point that inflation is substantially higher than what you get saving the cash. Banks and brokers are reaping the benefits of cheap money, yet HSBC is raising credit card interest rates and raking up large profits. We wonder why no one at the federal level ever questioned HSBC and HSBC Finance about this.