As reporters, investigators and investors try to make sense of why John Bond called for William Aldinger's early retirement these key issues shed some light on the subject. Shown here are too many incidents to overlook. The reader gets the impression that John Bond was embarrassed and ignored too many times.
Wishful thinking: November 15, 2002 - "HSBC Chairman John Bond says he is confident regulatory issues have been resolved. " Bond was speaking about Household International just before HSBC purchased the troubled predatory lender. The Embarrassment: In the summer of 2004 the Shea v Household Lawsuit alleges that Household imposed certain finance charges, late fees, and overlimit fees between October 20, 1994 and March 18, 2004 that were not authorized by Household's credit card agreements and were in violation of state law. Cost to Bond's company - US$11 million.
Wishful thinking: HSBC is confident that Household is in compliance and more compliance officers have been added. The Embarrassment: "As of 4 days ago, I have in writing as an employee, a document from Retail Services upper management advising us to process any application or joint application addition -- even if it does not have any signature or indication of photo ID. This is in violation of the Patriot Act."
Wishful thinking: Your HSBC Personal Internet Banking benefits include FREE online Bill Pay for all Personal Internet Banking users, View your account balances and transactions, Transfer funds between your HSBC accounts quickly... The Embarrassment: Andrew Armishaw, group executive and chief information officer at HSBC has some explaining to do. Consumers have reported in recent weeks (2005) that HSBC's online payment website,
Wishful thinking: An article in 2002 comments this is an "unusual transaction", that only last month (October 2002) Household was found guilty of predatory banking and borrowing practices and deceiving consumers. Household has also restated earnings covering fraudulent banking records. England's bank says "not to worry - Household has dealt with this problem effectively" and that now Household can "draw money from the HSBC deposit base". England's bank says this is a "fantastic opportunity to buy a franchise in America. The embarrassment: Washington, D.C., March 19, 2003 - The Securities and Exchange Commission has entered an Order Instituting Public Cease-and-Desist Proceedings, Making Findings, and Imposing Cease-and-Desist Order Pursuant to Section 21C of the Securities Exchange Act of 1934 finding that Household International Inc. violated the antifraud and reporting provisions of the Securities Exchange Act of 1934. Household consented to the entry of the Order without admitting or denying the findings of the Commission. The SEC said Household was rolling over US$1 Billion of bad loans every month.
Wishful thinking: Excerpt from and interview in The Banker: "Household has the opportunity to be a benchmark of quality. We want it to be a responsible business helping set the standard for the industry" newly- appointed chief executive Mr. Stephen Green said when presenting HSBC group's results for the first time in August." The embarrassment: Jan 11, 2005 NEW YORK, Jan. 10, 2005 (PRIMEZONE) -- The law firms of Kirby McInerney & Squire, LLP and Levy Angstreich Finney Baldante, Rubenstein & Coren, P.C. announce that the United States Supreme Court today denied defendants' petition to review the certification of a nationwide class asserting federal Racketeer Influenced and Corrupt Organizations Act (``RICO'') claims against H&R Block, Inc. (NYSE: - ) and Household International, Inc. (successor to Beneficial Corporation), now a subsidiary of HSBC... The suit shall therefore go forward against Block and HSBC - Household.
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accusations of predatory lending from consumer groups but Sir John Bond attributes Household's problems to 'one or two rogue branches.'" The embarrassment: Perhaps the easiest rebuttal is the fact that dozens of U.S. states sued Household for predatory lending, in 2002, and the company settled. Old Sir John apparently hasn't read those court papers, nor the subsequent voluminous documentation of ongoing predatory lending at Household. He either doesn't know or doesn't care, or both.
Wishful thinking: HSBC claims that it does not make political campaign contributions, that this is one of its "best practices." (The claim is made in HSBC's "corporate responsibility" statement). From Bloomberg on March 3, 2004: HSBC Holdings Plc Chairman Sir John Bond halted direct political contributions in the U.S. by Household International Inc. six months after buying the company. The embarrassment: As reported by Crain's Chicago Business of November 8, 2004: "At Prospect Heights-based HSBC North America Holdings Inc. (formerly Household International Inc.), PAC contributions have almost doubled since 2000 to nearly $1.5 million. Last year's acquisition by London- based HSBC Holdings Plc doubled the number of eligible contributors in the U.S. But the growth spurt really started during the 2002 election cycle, after the company decided to use its PAC for state- level contributions because direct corporate contributions were 'going by the wayside,' says Micaela Isler, HSBC's political director." Household has stepped up its efforts with a customized intranet site that includes a letter from William F Aldinger.
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was necessary and appropriate." (December 13, 2002, Douglas Flint conference call.) The embarrassment: HSBC North America Holdings did not stop the practices alleged in Shea v Household, including the practice of crediting customer payments late to increase their profitability. The practice started under Aldinger and Household International, continued after HSBC did due diligence, and they were sued as Aldinger was chairman and chief executive officer of HSBC North America Holdings Inc. In March 2005 the practices continue.
Wishful thinking: In 2002, in front of his own people in London Kentucky, William Aldinger made the comment at the annual meeting "we do not practice predatory lending." The embarrassment: Two months later the stock price dropped as a nationwide $484 million predatory lending settlement was announced.
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business helping set the standard for the industry." The embarrassment: Found on Household - HSBC Watch, earning the quote of the year for
2004, from a Household employee at their London Kentucky facility: "The consumers with their complaints are the pieces of s**tthat do not know how to manage money. Get an education and use it. Stop buying things and using credit cards. Invest in some real estate and drive a crappy car through your pitiful lives. At least you will retire thinking you accomplished something." In 2005 another employee, from behind the Household International firewall, used a company computer on company time to infuriate a web visitor who's home was foreclosed upon by HSBC.
Wishful thinking: That one or two consumer advocates (Acorn and Household - HSBC Watch) would lose interest after HSBC acquired Household. The Embarrassment: Both advocates are unrelenting. Acorn wrote a book. Household - HSBC Watch wrote a lesson plan for educators called "The History of Predatory Lending With an Emphasis on Household International and HSBC Finance Corporation." Household - HSBC Watch stepped up their task force to 24 hours a day, with online help center live and telephone hotline.
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