Household HSBC Watch

In a news article from late last week titled “Business big shot: Michael Geoghegan” we see the power of algorithms and content matching. Although I do not know what the article was really trying to prove, the Times Online also suggests other relative articles. One related article is titled “HSBC profit falls 28% as bad debt rises $10bn.” I think it is ironic. Yes, Michael Geoghegan assumed responsibility for a mess started by John Bond and William F. Aldinger. The mess was called Household International. Bond and Aldinger ran like rats from a sinking ship before subprime exploded around the world.

Michael Geoghegan “spent 12 years working in North America and South America and for a period chaired HSBC Bank USA”, according to the article. When was that? Before or after HSBC acquired Household International? It was it before William F. Aldinger held the position, so one must conclude that Michael Geoghegan remembers a totally different world than the world that now exists relative to HSBC North America and HSBC USA. Firing Sandy Derickson and Siddarth (you can call me Bobby) Mehta, without deeper drastic changes were meaningless. Then there is Douglas Flint, HSBC’s finance director. Does he know how to direct a finance company? I ask because the self-serving self-gratifying article shares responsibility between Geoghegan and Flint. This is how these two losers are doing so far:

January to June 2008: Loan impairment charges and other credit risk provisions surged 58 percent to 10.06 billion dollars in the six months to the end of June. Net profit for the first half of the year plunged 29 percent to $7.7 billion from $10.9 billion in profit in the January to June period of last year.

HSBC’s North America market posted a first-half loss of $2.9 billion, compared with profit of $2.4 billion a year ago. Much of the profit from a year ago was not a true profit.

In May 2008 HSBC reported a $3.2 billion write-down on subprime mortgage assets in the United States.

In November of 2007 HSBC took a $3.4 billion loan-impairment charge in its U.S. consumer finance business .

On May 12 2008 Knight Vinke said: “If HSBC’s accounting for its sub-prime assets had been as conservative as that of other banks its cumulative write down for sub-prime and related losses would now stand at approximately $50 billion in total rather than $25 billion - which makes HSBC the biggest causality of the sub-prime crisis so far.”

(HSBC put $US10.1 billion this year into loan-loss reserves, adding to charges of $US17.2 billion in 2007 and $US10.6 billion in 2006 for bad loans. ) That is a current total of $US37.9 billion, so look for Knight Vinke to revise their total figures in a new Knight Vinke press release.

Intelligent people are asking about bad loans. How many did HSBC dump on others, and how many did HSBC buy from others? How many are unmodified and illegal under their original terms and conditions? How many loans violate HOEPA? Some people say HSBC was no better than Countrywide, while Countrywide has attracted the attention of regulators, oversight officials, and lawyers everywhere.