Subprime investigation of HSBC and Citigroup
Refile News subprime investigations continue with today’s focus on Citigroup and HSBC. A twenty-nine page document by watchdog organization Household – HSBC Watch documents twenty years of build-up to subprime, while Columbia Journalism Review and a 2003 feature in Southern Exposure magazine look at Citigroup.
It is important to understand the predators before 2003. While Household International may at times be synonymous with predatory lending some readers may forget about CitiFinancial, part of Citigroup. Contrary to Citigroup’s claims of innocence amidst the whole predatory lending thing, the bank was actually taking big risks circa 2003.
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Another risk-taker was Lehman Brothers. “In 2006-2007 when Lehman tried to get out in front of the pending crisis by saying they had no subprime ties we knew they were lying,” said analyst Tim Blake at Household – HSBC Watch. “What people saw on Bloomberg, CNN, and elsewhere sometimes was far from the truth.”
For more on the early history of subprime and the ultimate demise of Household International, then known as HSBC Finance, we encourage your to read this free document using this link:
32 Pages :: Get yours now!
Our investigation into subprime continues as we turn our focus to Citigroup and CitiFinancial.
It’s worth recalling at this point that Mike Hudson won the Polk Award for his 10,000-word expose, “Banking on Misery: Citigroup, Wall Street, and the Fleecing of the South,” in the summer 2003 issue of tiny Southern Exposure magazine.
After reading the 29-page PDF from Household – HSBC Watch, this 15-page PDF by Mike Hudson puts Citigroup in focus. Titled “Banking on Misery – Citigroup, Wall Street, and the Fleecing of the South”, this document is valuable to anyone investigating subprime, predatory lending, and the current economic crisis.
“The people and the documents provide strong evidence that Citi’s subprime operations are reaping billions in ill-gotten gains by targeting the consumers who can least afford it,” says Hudson.
In a previous article “Subprime investigators look at foreclosure rescue cons“, we see proof that many working-class people are taken advantage of. Citi, critics say, is a model for America’s financial apartheid: a company that’s slow to offer affordable credit to minority and moderate-income communities (see “Reinventing redlining”), then profits by pushing a costly alternative.
Is it possible that the working class are targets of opportunity? Our investigators see a two-fold variation of subprime instead.
While a certain group or class of people are targeted, perhaps based on credit scores, another group is targeted by the “change in terms” received annually by credit card holders. Legal contracts are modified to protect lenders walking a fine line between subprime and predatory. The fine line could also be defined as “barely legal versus illegal.”
The bottom line is clear. HSBC and Citigroup – and many others – rely upon consumers who DO NOT read their material, including changes in terms and legal contracts. Better yet, for a subprime lender, are those who do not understand what they are reading.
Consider the cases of “Free money”
HFC and Beneficial Finance quote lower monthly payments on loans. The catch, however, is that payments are amortized over 20 or 30 years, but the loan is only for 10 years. A daily interest loan could mean you owe more than you borrowed after 10 years when the loan is due in full. Citifinancial is no different.
The loan is nothing but pure profit and free money for the lender.
Many families are experiencing higher credit card rates today. Again “Free money” is the objective. A credit card rate increase from 12 percent to 29.94 percent – when monthly minimum payments stay the same – simply means the balance can never be paid off.
We conclude this part of our investigation into subprime by giving you two great documents to study. You may draw your own conclusions on whether HSBC and Citigroup are truly banking on misery.
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