How to start a consumer advocacy organization

Four years have passed since this letter was written. In the final paragraph it says “You have witnessed the destruction caused by Household International and HSBC Finance in the United States, and the global financial impact around the world.” Now, as 2012 begins, we know how global financial matters got worse. So many key points in this letter were correct.

Looking back at HSBC and subprime, HSBC lost at least $55 billion (USD). Knight-Vinke tried to tell HSBC that the bank was headed in the wrong direction. That position also turned out to be correct. Abuse of the US military made headlines in 2011, so that practice continued since we wrote the letter in 2007. Sometimes things never change.

For a mere $1265 HSBC paid a huge price for abuse. Here is our letter from 2007:

An open letter to HSBC, Knight-Vinke and Stephen Green:

Written November 14, 2007:

Six years ago I wrote to William F. Aldinger, Chairman and CEO of Household International. My letter stated that I was dissatisfied with deception and shady tactics relative to my loan. I also indicated that, while addressing a group of 100 active duty soldiers, more than ten percent of the soldiers experienced cases of fraud, deception, and shady tactics. Household International, HSBC auto finance, HFC, Beneficial Finance, Household Retail Services, HRS, HRSI, Household Taxmasters, or merchants financed by Household’s credit cards perpetrated that fraud.

My letter to Aldinger also described a second attempt on the financial wellbeing of a soldier, perpetrated through Household’s billing for their merchant Best Buy. No statement was received for month 12 of a 12 month interest free promotion. It was no mistake. As evidenced by Shea vs Household the omission was a careful and deliberate attempt to collect all of the interest, late fees, over-limit fees, and telephone payment charges relative to this soldier’s account.

My letter to William F. Aldinger was factual, rational and forceful. During that time frame Aldinger’s assistant Thomas M. Detelich was quoted as telling a complaining customer to leave Aldinger alone and that “they should be careful because Household’s problems have a tendency to disappear.” Detelich lacked credibility in my book, and seemed like a follower and a CIA black ops want-to-be. Aldinger, in my opinion, seemed like a predatory lender, running a pay-for-performance company that enriched employees without regard for the law, customer satisfaction, or the SEC.

My demand was simple. I asked for a credit to my account for $1250 which was padded on to my balance while I was bounced from branch office to corporate and back again. I asked for the return of a $15 telephone payment fee assessed to the active duty soldier mentioned above. I also started a one-page web site.

I never received the courtesy of a reply. I never received a credit, nor did the soldier. My letter told Aldinger exactly what I would do if I did not get some satisfaction. My point was very simple, as I stated that active duty military and retirees deserved fair, legal, and honest treatment and fiduciary responsibility, thus I held William F. Aldinger responsible for his company – Household International. I did not survive Viet Nam, Somalia, Khobar Towers, Beirut, and Desert Storm only to be told by a smart mouthed state supervisor to “get over it – we have your money so let’s move on.”

Those on active duty did not survive Somalia, Saudi Arabia, Lebanon Bosnia, Kosovo, Afghanistan, Haiti, and Panama, only to be attacked financially. In fact some of the kids did not survive, and are no longer with us.

While Aldinger and Detelich made their decision I made mine, and I told Aldinger what I would do. A mere $1265 was motivation for us to take a second look at Household International. Meanwhile Aldinger was covering up the fact that he would be required to re-state company earnings. He was issued a cease and desist order from the SEC (Household was rolling over $1 billion in bad loans every month), and allegations of predatory lending began to surface. Household evicted an 89-year-old woman in Florida, so I contacted the Florida Attorney General. California had an ongoing investigation, so I contacted the California Attorney General. I contacted the OCC, FTC, and many others.

As Detelich enjoyed his fantasy as a mob-connected strong man, CIA operative and closet FBI agent (none of which was true) I formed Household Watch consumer advocates. Our members, made up of many real soldiers and Marines, contacted the Department of Defense, GSA, and the FBI. Household International countered by forming an alliance with the University of Maryland’s UMUC, and UMUC had a government contract to teach college classes to active duty military around the world. Knowing what we knew, our active duty military members realized the Household – UMUC agreement was a travesty.

I wrote to Bill O’Reilly at Fox News, sending pages of evidence to his researchers which, over the years, turned out to be true and very telling. Household International countered by advertising on Fox News during the O’Reilly factor. Our story was never told. We responded by building our watchdog web site and recruited volunteers from around the country. It was clear to Household International and William Aldinger that we were serious, but I never received one letter, a credit, or a courtesy call from a branch manager.

We worked long hours, using retirees with combat experience to put together an action plan based on input we were receiving from insiders, attorneys, state AG’s, and others. When the news broke that Household International has been charged with predatory lending, and had reached a settlement of $484 million, we saw the first result of our efforts. We continued to supply the SEC and OCC with information. When the news broke that the SEC issued a cease and desist order against Household International we were very happy. Later I personally spoke with William Shea – the Shea part of Shea vs Household. That case cost Household International another $10 million, but was very telling because it also revealed that Household had a scam to hold credit card payments until they were considered late. The suit alleged that Household, and later HSBC, ran the scam from 1994 until 2004. We know they still operate that way today.

We do not begin to assume that we are important in, nor the coordinating force behind Household’s problems, but we did our best to help in a professional and insightful manner. The squeaky wheel gets the grease, so to speak. Household paid out almost half a billion dollars, but we never even got a $15 credit for a brave young soldier. Household International’s IT department was helpful when an insider tried a denial of service attack. A Household employee (traced back by IP address) said this in our blog: “The consumers with their complaints are the pieces of s**t that 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.”

The comment caused us to refocus, realizing that Household International never really changed. HSBC owned Household by the time the comment quoted above was entered in our blog. The OCC opened up the public open comment period prior to HSBC’s purchase of Household International. Under my signature we sent four letters to the OCC. The letters were reviewed by the OCC as the Federal Regulator, HSBC’s attorneys, and Household International. Copies went to the FBI relative to racketeering, the FTC relative to HSBC’s merchants, the Department of Defense relative to a predatory lender operating within the Defense Department, and to other sources.

Our letters supplied a great amount of evidence, the history of predatory lending, and Household’s abuse of the U.S. military. From an economic standpoint we also saw the impact that such tactics would have on the U.S. economy. Suspecting that HSBC had not performed due diligence in the Household International matter we supplied as much written material as we could, and our website grew to the point that other material was searchable. We clearly stated that HSBC would get our attention, and we would become Household – HSBC Watch. HSBC and Household International had conducted business in the past and had a prior relationship.

HSBC’s purchase of Household International was finalized in early 2003. By that time we had a detailed database of material submitted by customers, lawyers, law clerks, and many others. We continue to gather data for trend analysis as I write this in late 2007.

Please don’t forget how our watchdog organization started. I accused Household International of defrauding the United States military. Specifically I cited two cases. Now HSBC stands accused of “defrauding” US military personnel, some of whom are on duty in Iraq, by overcharging them on high interest loans, according to a study from a leading US-based human rights group. Inner City Press and its Fair Finance Watch, based in New York, has uncovered the potentially damaging evidence from documents obtained under the Freedom of Information Act.

While Household, and later HSBC, paid millions to settle specific allegations they always did so without admitting responsibility. As time went by the OCC admitted in an interview that I conducted, that they never knew how to regulate or oversee Household International and HSBC Finance Corporation. The FTC gave in to the OCC as the OCC said they would take complaints about HSBC and merchants (if the complaint involved a merchant), while merchant complaints had previously been the responsibility of the FTC. Federal government regulation and oversight became a convoluted cloudy mess. At Household – HSBC Watch our focus stays steady.

We find it interesting that employees like to comment on reports by those who get behind on their payments, often telling the person to take responsibility. HSBC and Household International always settled state and federal charges without assuming any responsibility. William F. Aldinger never accepted responsibility when I wrote my first formal letter. Aldinger never accepted responsibility for passing the oversight of Household Watch to HSBC, thus making us Household – HSBC Watch. We find it interesting that HSBC employees comment on our “quest to bash everything about HSBC.” We also find it appalling when any company hurts the U.S. military, the elderly, the unsuspecting and the helpless. We are the ones who fought for your freedom to say such things.

Americans find it appalling when any financial organization has such lax lending standards that the entire world economy is effected by an unsustainable sham. Granted HSBC is not the only lender involved with subprime, but HSBC is one of the largest. In fact HSBC is not involved with subprime – HSBC Finance Company is, and HSBC Finance is simply Household International with a different name. Household International prior to HSBC’s purchase was a house of cards, deceit, and shady tactics. Correctly labeled as a predatory lender, HSBC should have changed the structure and mindset. HSBC should have changed the pay-for-performance dog eat dog attitude. HSBC should have changed the “we can do no wrong” mindset of those who operated outside the law with careless and reckless abandon. HSBC should have made it clear that paying a small fine to make big profits is unacceptable. HSBC did none of the above.

Clearly HSBC in London used Household International, Decision One, HSBC Finance, and in part HSBC USA, as a means to an end when profits were high, with little regard for employees who are now subject to termination, or have already lost their jobs. Mortgage brokers and closing agents, both inside HSBC and outside the firm, are unemployed. If cash-strapped Americans begin to default on credit cards more employees will be fired and cast aside like non-humans. The elderly like 89-year-old Madie Wilson lost their homes to predatory lending. Private label credit card customers were targeted. The military was abused and targeted. HSBC’s own employees were used. HFC and Beneficial customers were only given half the details and abused with loans they could not repay with quoted monthly payments.

I did get over the $1250 taken from me by Household International years ago. Our operation was a success, and Household paid out $484 million, HSBC paid out $10 million more because of Household, and now HSBC has losses that exceed the $14 billion they paid for Household in the first place. There will be more losses to come as credit cards begin to go bad. HSBC will be sued by investors, shareholders, and mortgage guarantee companies. The U.S. Government, relative to racketeering with H&R Block or private label credit card accounts, will also sue HSBC. States will sue under more charges of predatory lending as cities and neighborhoods become blighted and good homeowners watch their property values drop.

I urge the President of Brazil and the President of Mexico to study the facts. I urge those in China and Korea to study the facts. Islamic countries need to study the facts. In 2003 John Bond said “HSBC’s acquisition of Household contributes to a major strategic objective of maintaining a balanced worldwide portfolio. Approximately 30 per cent of HSBC’s assets are now in the Americas, 30 per cent in Asia and the Middle East and 40 per cent in Europe. HSBC’s broad spread of businesses, balanced between OECD countries and developing markets, is further diversified through the addition of Household’s consumer lending portfolios. Personal financial services is now HSBC’s largest line of business.” The quote is a matter of public record at the SEC.

Leaders of countries categorized as “emerging nations” or “emerging markets” should take note. You have witnessed the destruction caused by Household International and HSBC Finance in the United States, and the global financial impact around the world. Unless there is a change the evidence suggests that your country may suffer the same fate. If nothing is done your citizens will also form an HSBC Watchdog organization in years to come.

To give you some background, we are an association of retired military personnel. Over the years, from 1999 through today, we furnished evidence to regulators, attorney’s general, stockholders, news media, and the OCC. Whenever we could help, we did. If asked for information we provided it. Twelve years later one of us finally had time to get a real job, but the sacrifices were worth it.