The Perils of Unemployment - Part II
Note: any information contained in this post is intended for entertainment and amusement purposes and is compliant with the artistic license issued to me as a practicing songwriter and beloved entertainer to dozens. It in no way is intended to invoke the (720 ILCS 300/) Derogatory Statements About Banks Act. Besides, it is all true.
Yeah, it's lousy having to look for work in the Bush Economy; having to stretch the dollars you have to some imaginary payday. Through luck, my wife's income, some well-timed, part-time gigs, the generosity of friends and family, and necessity, we have actually been managing OK, but the sharks are starting to circle a bit. Yesterday, I received a check1 in the mail.
The good folks at Beneficial® knew somehow of my circumstance, felt they should do something, and sent me a check for $2,500.00 along with a flyer saying I had an additional $500.00 in credit where that came from. All I have to do is endorse the check (in so doing I agree to the terms of the loan), and my friendly local bank will put nice, crisp paper money in my hand. Problem solved.
The only problem was I knew this was an indicator of a larger problem. Some unsavory characters must had studied my fitful situation and decided to throw me a lifeline in the form of a couple of cement blocks at the end of a chain. Someone's wanting to watch me sink and they want to rifle my pockets before I go to the bottom. Gee fellas, I thankfully still possess presence of mind, you know.
Looking at the terms, it was almost diabolical genius the way this offering was structured. In big bold letters a accompanying the check said, "This is a real check for $2,500.00!" A notice from Mr. Jeff Good at Beneficial said it was to make my life "even more rewarding."1 A Special Notice referred me to enclosed documents entitled "Important Notice Required Under The Fair Credit Reporting Act. Sure enough, there were some flyers loaded with financial-ese and legal hocus-pocus. In it I found they were offering an APR of 29.895%. Moreover, subject to the applied interest were any cumulative charges such as administrative or credit insurance charges rounded to the nearest $1.00, and annual fee of $50.00, late fees, bad check fees, and an overlimit fee. There was also an acceleration clause attached to the agreement.
Also troubling were the accompanying "Privacy Statement" and "Arbitration Rider". The Privacy Statement" states a commitment to me to uphold the trust that I have placed in them and they pledge to protect that trust. Apparently, they collect certain demographic information, not all of it "publicly available" from either forms I have filled out or credit bureau reports. In addition to making sure this information is kept "safe from unauthorized access", Household maintains safeguards in compliance to "applicable federal standards"1 to guard the information. From time to time for "general business purposes", they will share this information with affiliated companies and "non-financial service providers that become affiliated with us in the future"1. This is done when they think "it may benefit [me]." Such non-affiliated companies may include insurance service providers, or internet service providers with whom they have a service agreement. Chutzpah. Pure Chutzpah, in'it?
Remember back in the old days when banks had to service in-state customers only and couldn't co-mingle affairs with insurance subsidiaries? {sigh}
The "Arbitration Rider" seemed to steer any dispute to the "National Arbitration Forum" located in Chesapeake, VA (probably in a venue designed by Thomas Jefferson himself) where the lender's initial risks due to arbitration were fixed at $100.00 if the amount in question was $100.00 A dispute for a larger sum meant the borrower agreeing to split hearing fees with the additional provision that "any costs over the amount charged by the arbitration administrator for a Claim equal to your loan amount shall be paid by [the poor sap who is struggling for some miracle hope in the form of a $2,500.00 no-questions-asked loan]1
Wow, can this possibly be legal? It said in a disclosure statement that it was governed by the Illinois Financial Services Development Act and Federal law.
My first thought was to report this to Illinois' plucky Attorney General Lisa Madigan. Protecting families is her job. Then, like a good citizen, I was going to report these bozos to the Illinois 5th Dist. Congressman Rahm Emmanuel. Since he serves on the House banking and finance committee, he might be interested to know some outfit was soliciting uninitiated, possibly predatory, subprime lines of credit through the mail to the undeserved.
Just who are these nutballs anyway?
Beneficial® is a wholly owned subsidiary of Household International, Inc. located out in good old Prospect Heights, Ill. In March 2003 Household International was purchased for $14.2 bn2 by HSBC Holdings PLC making it the 2nd largest banking group in the world (behind the Saudi owned Citi Group) and the 4th largest corporation in the world with over 218,000 employees.
The former Illinois Attorney General Jim Ryan was familiar with Household International, as were the attorney generals from Arizona, California, Connecticut, Florida, Idaho, Illinois, Iowa, Massachusetts, Michigan, Minnesota, North Carolina, New Jersey, New Mexico, New York, Ohio, Texas, Vermont, Washington and Washington, D.C. They had investigated and that action resulted in a 2003 settlement of $484 million to be disbursed to victims in all 50 states.3
The Chief Theif at Household is William F. Aldinger III At the time of the sale, Bill was getting paid $10.2 million annually.2 This is somewhat surprising as in the previous four years shareholders had received returns less than the S&P 500 index and in addition to the $484 million dollar judgment there was a separate California judgment in 2003 for $12 million.2
William F. Aldinger III had this to say, "On the predatory lending side, some people have done unethical things. We dont do that."3 If you read it over again, he appears to be implying that Household is a predatory lender, but they are at least ethical at the practice. The enormity of the judgments (well over a half billion dollars to date) whereby they accepted no blame but agreed to the settlements suggest otherwise.
Not that Household does not possess a spirit of generosity. To help the underprivileged, they partnered with the National Center for Neighborhood Enterprise to provide free Financial Literacy training to low-income Washington D.C. constituents. I think I hear scary music, do you?
The facts of the settlement clearly point to Household International being a known predatory lender. Why was a venerable institution like HSBC acquiring them at such great price? According to their Chairman Sir John Bond, "The broad strategic decision is this: two-thirds of every economy in the world is based on consumer expenditure and the more you can get your organization to sit astride that, frankly, the better for your business."2
HSBC, also known as "Honkers and Shankers", is an old line British concern initially established to do business with colonial Hong Kong. They are no stranger to the risky business of worldwide banking. As well as having offices destroyed at the World Trade Center in 2001, on November 20, 2003 Al Qaeda singled them out for special treatment by leveling their building in Instanbul with a bomb blast that destroyed the bank's head office in Turkey and caused several deaths and hundreds of injuries.5 For the six months of 2004, HSBC's interest income rose 29% to $23.48 billion. Net interest income after LLP rose 39% to $12.3 billion. Net income, according to US GAAP (Generally Agreed Accountant-like Pod-people), increased from $3.37 billion to $7.34 billion.6 Even with Household's mammoth legal troubles, the 2003 acquisition (at 1.7 times book value) had sailed through and earnings were bright.
Oddly, the monumental $484 million 2003 settlement had not slaked Household's thirst for risky consumer debt, or slowed their predatory practices. Within the same calendar year they again settled a class-action suit for over $100 million.7. Either William F. Aldinger III is inept when it comes to avoiding liability, or he is sly like a fox and sees the hefty settlements as a manageable cost of business. Sir John Bond certainly doesn't seem to mind. And neither do state regulators.
Illinois' former Governor George Ryan, currently indicted for corruption, signed the Illinois Financial Services Development Act8 in order to bring jobs to the area. Unfortunately, financial services are currently leading the pack of work sectors losing jobs due to layoffs and outsourcing.9 But it did attract lenders like Household to set up shop and ply their trade such as it is. Actually, it is rather sad that HSBC with over 218,000 employees produces nothing whatsoever, but that is another story.
January 1, 2004 Gov. Blagojevich signed into law SB1784 The High Risk Home Loan Act10 which had been championed by then State Sen. Barack Obama as a means to stem the tide of foreclosures occuring throughout Illinois, but especially concentrated in low-income urban neighborhoods of Chicago. The predatory nature of the subprime business blighting entire neighborhoods prompted the Chicago City Counsel to pass the nation's first city ordinance prohibiting such practices.
Only, it must still be happening or else I would not have received this letter yesterday, right?
Dan Philips, the Chief Executive of FirstPlus Financial of Dallas, a company that is known for going out on a limb, even by industry standards, compared bankers with subprime lenders. "Bankers are really accountants who make loans," Mr. Philips said. "On this side of the industry, you eat what you kill." 11 There is an explosion in the subprime lending industry and lenders are thriving off of the increased rates of bankruptcy and the worsening economy. From the Consumer Union Report:
But it is increasingly clear that even with states attempting to quell the worst of abuses the industry is going strong. Furthermore, some confusion has erupted over whether federal laws or state laws have precedence when dealing with an abusive lender. The lenders are trying cases in federal courts in an effort to establish this so they may do business under the more relaxed federal laws and they are winning.
The Bush administration and all the other "casino capitalists" see no issue with subprime lending. They have sold out citizens to the most unprincipled set of sharks we have seen since the gilded age. This is the Ownership Soceity emergent:the multi-national conglomerates bringing massive resources to bear in weakening regulations meant to protect citizens and robbing people.
As I noted at the top, merely posting this could make me liable for a Class A misdemeanor such is the pervasive power that the financial community sees fit to deploy through its governmental agents. There is no risk to the company in question because, following their last round of settlements, they have done over $150 million worth of compliance research and they are no doubt doing what they do "lawfully". Only our laws are morphing into criminal enterprises themselves made by and for a class intent on some sick fantasy of Total and Complete Capitalism. There may come a time where "rule by law" is itself tyranny.
You see, I had read the letter and thought "I should report these guys." Then, it became clear that "these guys" had literally $1 trillion in assets and were unstoppable. Entire nations cower to them. State laws are simply a niggling bit of puffery they adroitly sidestep. There is nothing that can possibly be done to these necro-philes.
Am I mad? You haven't seen me mad.
1© 2004 Beneficial - Member HSBC Group Personalized Credit Line Account Agreement [HFL/CP-PERS-067V2] and supplemental documents including but not limited to "Privacy Statement" [HFL/IN-PVCY-076 v2 © 9/04], Fair Credit Reporting Act Notice [HFL/IN-FCBR-012], "Arbitration Rider" [HFL/IN-ARBH-023v2 © 9/04].
2"HSBC's killer move" by Karina Robinson - THE BANKER - Published: 06 October, 2003.
3"Household International Agrees to Pay $484 Million in Lending Case" by Herbert G. McGann, Associated Press October 11, 2002.
4Excerpted Chicago Sun Times quote from Responsible Wealth Press Release "Household International Shareholders Oppose Predatory Lending" by Molly Lanzarotta May 3, 2001.
5see "HSBC" Wikipedia online dictionary.
6see Yahoo Finance
7see "Household International to settle suit" published 11-26-2003 by CHINAdaily. ©Chinadaily.com.cn
8see "ID Financial Services Development Act
9see IDES Press Release (PDF)
10see "Timeline of Illinois Campaign to Stop Predatory Lending" - National Training and Information Center.
10see "The Hard Sell - Pt. II The Subprime Lending Industry" - Consumers Union.
Yeah, it's lousy having to look for work in the Bush Economy; having to stretch the dollars you have to some imaginary payday. Through luck, my wife's income, some well-timed, part-time gigs, the generosity of friends and family, and necessity, we have actually been managing OK, but the sharks are starting to circle a bit. Yesterday, I received a check1 in the mail.
The good folks at Beneficial® knew somehow of my circumstance, felt they should do something, and sent me a check for $2,500.00 along with a flyer saying I had an additional $500.00 in credit where that came from. All I have to do is endorse the check (in so doing I agree to the terms of the loan), and my friendly local bank will put nice, crisp paper money in my hand. Problem solved.
The only problem was I knew this was an indicator of a larger problem. Some unsavory characters must had studied my fitful situation and decided to throw me a lifeline in the form of a couple of cement blocks at the end of a chain. Someone's wanting to watch me sink and they want to rifle my pockets before I go to the bottom. Gee fellas, I thankfully still possess presence of mind, you know.
Looking at the terms, it was almost diabolical genius the way this offering was structured. In big bold letters a accompanying the check said, "This is a real check for $2,500.00!" A notice from Mr. Jeff Good at Beneficial said it was to make my life "even more rewarding."1 A Special Notice referred me to enclosed documents entitled "Important Notice Required Under The Fair Credit Reporting Act. Sure enough, there were some flyers loaded with financial-ese and legal hocus-pocus. In it I found they were offering an APR of 29.895%. Moreover, subject to the applied interest were any cumulative charges such as administrative or credit insurance charges rounded to the nearest $1.00, and annual fee of $50.00, late fees, bad check fees, and an overlimit fee. There was also an acceleration clause attached to the agreement.
Also troubling were the accompanying "Privacy Statement" and "Arbitration Rider". The Privacy Statement" states a commitment to me to uphold the trust that I have placed in them and they pledge to protect that trust. Apparently, they collect certain demographic information, not all of it "publicly available" from either forms I have filled out or credit bureau reports. In addition to making sure this information is kept "safe from unauthorized access", Household maintains safeguards in compliance to "applicable federal standards"1 to guard the information. From time to time for "general business purposes", they will share this information with affiliated companies and "non-financial service providers that become affiliated with us in the future"1. This is done when they think "it may benefit [me]." Such non-affiliated companies may include insurance service providers, or internet service providers with whom they have a service agreement. Chutzpah. Pure Chutzpah, in'it?
Remember back in the old days when banks had to service in-state customers only and couldn't co-mingle affairs with insurance subsidiaries? {sigh}
The "Arbitration Rider" seemed to steer any dispute to the "National Arbitration Forum" located in Chesapeake, VA (probably in a venue designed by Thomas Jefferson himself) where the lender's initial risks due to arbitration were fixed at $100.00 if the amount in question was $100.00 A dispute for a larger sum meant the borrower agreeing to split hearing fees with the additional provision that "any costs over the amount charged by the arbitration administrator for a Claim equal to your loan amount shall be paid by [the poor sap who is struggling for some miracle hope in the form of a $2,500.00 no-questions-asked loan]1
Wow, can this possibly be legal? It said in a disclosure statement that it was governed by the Illinois Financial Services Development Act and Federal law.
My first thought was to report this to Illinois' plucky Attorney General Lisa Madigan. Protecting families is her job. Then, like a good citizen, I was going to report these bozos to the Illinois 5th Dist. Congressman Rahm Emmanuel. Since he serves on the House banking and finance committee, he might be interested to know some outfit was soliciting uninitiated, possibly predatory, subprime lines of credit through the mail to the undeserved.
Just who are these nutballs anyway?
Beneficial® is a wholly owned subsidiary of Household International, Inc. located out in good old Prospect Heights, Ill. In March 2003 Household International was purchased for $14.2 bn2 by HSBC Holdings PLC making it the 2nd largest banking group in the world (behind the Saudi owned Citi Group) and the 4th largest corporation in the world with over 218,000 employees.
The former Illinois Attorney General Jim Ryan was familiar with Household International, as were the attorney generals from Arizona, California, Connecticut, Florida, Idaho, Illinois, Iowa, Massachusetts, Michigan, Minnesota, North Carolina, New Jersey, New Mexico, New York, Ohio, Texas, Vermont, Washington and Washington, D.C. They had investigated and that action resulted in a 2003 settlement of $484 million to be disbursed to victims in all 50 states.3
The Chief Theif at Household is William F. Aldinger III At the time of the sale, Bill was getting paid $10.2 million annually.2 This is somewhat surprising as in the previous four years shareholders had received returns less than the S&P 500 index and in addition to the $484 million dollar judgment there was a separate California judgment in 2003 for $12 million.2
William F. Aldinger III had this to say, "On the predatory lending side, some people have done unethical things. We dont do that."3 If you read it over again, he appears to be implying that Household is a predatory lender, but they are at least ethical at the practice. The enormity of the judgments (well over a half billion dollars to date) whereby they accepted no blame but agreed to the settlements suggest otherwise.
Not that Household does not possess a spirit of generosity. To help the underprivileged, they partnered with the National Center for Neighborhood Enterprise to provide free Financial Literacy training to low-income Washington D.C. constituents. I think I hear scary music, do you?
"The way a company behaves is going to be of crucial importance, the dominant feature of life in the 21st century. Sir John Bond
The facts of the settlement clearly point to Household International being a known predatory lender. Why was a venerable institution like HSBC acquiring them at such great price? According to their Chairman Sir John Bond, "The broad strategic decision is this: two-thirds of every economy in the world is based on consumer expenditure and the more you can get your organization to sit astride that, frankly, the better for your business."2
HSBC, also known as "Honkers and Shankers", is an old line British concern initially established to do business with colonial Hong Kong. They are no stranger to the risky business of worldwide banking. As well as having offices destroyed at the World Trade Center in 2001, on November 20, 2003 Al Qaeda singled them out for special treatment by leveling their building in Instanbul with a bomb blast that destroyed the bank's head office in Turkey and caused several deaths and hundreds of injuries.5 For the six months of 2004, HSBC's interest income rose 29% to $23.48 billion. Net interest income after LLP rose 39% to $12.3 billion. Net income, according to US GAAP (Generally Agreed Accountant-like Pod-people), increased from $3.37 billion to $7.34 billion.6 Even with Household's mammoth legal troubles, the 2003 acquisition (at 1.7 times book value) had sailed through and earnings were bright.
Oddly, the monumental $484 million 2003 settlement had not slaked Household's thirst for risky consumer debt, or slowed their predatory practices. Within the same calendar year they again settled a class-action suit for over $100 million.7. Either William F. Aldinger III is inept when it comes to avoiding liability, or he is sly like a fox and sees the hefty settlements as a manageable cost of business. Sir John Bond certainly doesn't seem to mind. And neither do state regulators.
Illinois' former Governor George Ryan, currently indicted for corruption, signed the Illinois Financial Services Development Act8 in order to bring jobs to the area. Unfortunately, financial services are currently leading the pack of work sectors losing jobs due to layoffs and outsourcing.9 But it did attract lenders like Household to set up shop and ply their trade such as it is. Actually, it is rather sad that HSBC with over 218,000 employees produces nothing whatsoever, but that is another story.
January 1, 2004 Gov. Blagojevich signed into law SB1784 The High Risk Home Loan Act10 which had been championed by then State Sen. Barack Obama as a means to stem the tide of foreclosures occuring throughout Illinois, but especially concentrated in low-income urban neighborhoods of Chicago. The predatory nature of the subprime business blighting entire neighborhoods prompted the Chicago City Counsel to pass the nation's first city ordinance prohibiting such practices.
Only, it must still be happening or else I would not have received this letter yesterday, right?
Dan Philips, the Chief Executive of FirstPlus Financial of Dallas, a company that is known for going out on a limb, even by industry standards, compared bankers with subprime lenders. "Bankers are really accountants who make loans," Mr. Philips said. "On this side of the industry, you eat what you kill." 11 There is an explosion in the subprime lending industry and lenders are thriving off of the increased rates of bankruptcy and the worsening economy. From the Consumer Union Report:
"...Mr. Moskowitz recounted the terms of a loan he considered to be unconscionable. A West Coast "D" credit lender had charged over $14,500 in origination and processing fees — for a $74,000 loan to a New Jersey-based borrower now in foreclosure on the loan. The origination and processing fees totaled 19 points. About this loan, Moskowitz commented, "That’s not American — ripping off someone who’s blind, who’s black, whose mother’s dying, ...I don’t think that’s free enterprise."
But it is increasingly clear that even with states attempting to quell the worst of abuses the industry is going strong. Furthermore, some confusion has erupted over whether federal laws or state laws have precedence when dealing with an abusive lender. The lenders are trying cases in federal courts in an effort to establish this so they may do business under the more relaxed federal laws and they are winning.
The Bush administration and all the other "casino capitalists" see no issue with subprime lending. They have sold out citizens to the most unprincipled set of sharks we have seen since the gilded age. This is the Ownership Soceity emergent:
As I noted at the top, merely posting this could make me liable for a Class A misdemeanor such is the pervasive power that the financial community sees fit to deploy through its governmental agents. There is no risk to the company in question because, following their last round of settlements, they have done over $150 million worth of compliance research and they are no doubt doing what they do "lawfully". Only our laws are morphing into criminal enterprises themselves made by and for a class intent on some sick fantasy of Total and Complete Capitalism. There may come a time where "rule by law" is itself tyranny.
You see, I had read the letter and thought "I should report these guys." Then, it became clear that "these guys" had literally $1 trillion in assets and were unstoppable. Entire nations cower to them. State laws are simply a niggling bit of puffery they adroitly sidestep. There is nothing that can possibly be done to these necro-philes.
Am I mad? You haven't seen me mad.
1© 2004 Beneficial - Member HSBC Group Personalized Credit Line Account Agreement [HFL/CP-PERS-067V2] and supplemental documents including but not limited to "Privacy Statement" [HFL/IN-PVCY-076 v2 © 9/04], Fair Credit Reporting Act Notice [HFL/IN-FCBR-012], "Arbitration Rider" [HFL/IN-ARBH-023v2 © 9/04].
2"HSBC's killer move" by Karina Robinson - THE BANKER - Published: 06 October, 2003.
3"Household International Agrees to Pay $484 Million in Lending Case" by Herbert G. McGann, Associated Press October 11, 2002.
4Excerpted Chicago Sun Times quote from Responsible Wealth Press Release "Household International Shareholders Oppose Predatory Lending" by Molly Lanzarotta May 3, 2001.
5see "HSBC" Wikipedia online dictionary.
6see Yahoo Finance
7see "Household International to settle suit" published 11-26-2003 by CHINAdaily. ©Chinadaily.com.cn
8see "ID Financial Services Development Act
9see IDES Press Release (PDF)
10see "Timeline of Illinois Campaign to Stop Predatory Lending" - National Training and Information Center.
10see "The Hard Sell - Pt. II The Subprime Lending Industry" - Consumers Union.
posted by obelus at 1/22/2005 07:10:00 AM
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