No. 9 of The Subprime 25: HSBC Finance Corp./HSBC Holdings plc

Introduction

Total high-interest loans 2005-2007:

At least $50.3 billion ***

Federal bailout money received:

None

Company overview

• Status: STOPPED LENDING. In March 2009, HSBC Finance Corp. discontinued loan origination of all products by its consumer lending business.
• History: HSBC, one of the world’s largest banks, made a big bet on the U.S. subprime mortgage market. It lost. HSBC bank traces its origins back to the Hongkong and Shanghai Banking Corporation Limited, established in 1865, which is how it got its name. In 2003, HSBC acquired Household International, which became HSBC Finance Corp. in December 2004. The deal included Charlotte, N.C.-based Decision One, which was bought by Household in 1999. HSBC Finance announced on March 2, 2009 that it would discontinue loan origination of all products by its consumer lending business but would continue to service its outstanding loans. An HSBC Finance spokeswoman told the Center via email that the bank was “primarily a portfolio lender,” meaning it held its mortgages rather than sold them to third parties.
• Parent/subsidiary companies: HSBC Holdings plc is a British banking giant with numerous global subsidiaries including HSBC North America Holdings Inc. and its subsidiary, HSBC Finance Corp. in the United States. HSBC has operated several mortgage subsidiaries including Decision One Mortgage Co. LLC, Beneficial, and HFC.
• CEO: Group chief executive: M.F.Geoghegan (still in that position as of May 2009)
  • Most recent salary: Not available
• Location: Mettawa, Illinois
• Year founded: 1865
• Backers: HSBC was largely a “portfolio lender,” the company told the Center, meaning it held on to its loans rather than sell them to third parties. However, it did securitize loans from its own subprime subsidiaries.

Lobbying overview

• Lobbying: HSBC reported $21,150,000 in lobbying expenditures since 1999. **
• Total Contributions: At least $6,437,927 *
• Top Recipients:
  1. National Republican Senatorial Committee $303,272
  2. Republican State Leadership Committee $200,295
  3. National Republican Congressional Committee $197,805
  4. Democratic Senatorial Campaign Committee $186,000
  5. Democratic Congressional Campaign Committee $144,130

Investigations

• Settlements:
  • In 2002, prior to its buyout by HSBC, Household International agreed to a $484 million nationwide settlement with state attorneys general and banking regulators for deceptive lending practices.

** Lobbying totals calculated by the Center for Public Integrity using data from the Senate Office of Public Records.

* Contribution grand total includes employee and soft money contributions from the lender and its subsidiaries. Top recipient totals include employee and political action committee contributions. Data provided by CQ Money Line, analysis by the Center for Public Integrity.