Cerberus and HSBC Finance Corporation

Cerberus Capital Management LP is one of the largest private equity investment firms in USA. Cerberus Capital Management LP bought 80-percent of Chrysler Group for 7.4-billion dollars. The deal unwinds a 1998 merger. DaimlerChrysler will change its name to Daimler AG. Chrysler will become Chrysler Holding LLC. Under the deal, Daimler will keep a 19.9 percent stake in Chrysler. It said that Chrysler would keep its heavy obligations for pensions and health care costs, a key issue complicating DaimlerChrysler’s effort to sell the division.

Cerberus is still looking closely at H&R Block’s subprime operation Option One. Is Cerberus looking at HSBC Finance Corporation? The upside for HSBC is they would get rid of the sullied HFC and Beneficial names and possibly rid themselves of the stigma of predatory lending.

The upside for Cerberus is HSBC wrote off an amount nearly equal to the entire purchase price and net worth of HSBC Finance Corporation through markdowns for bad debt, much of which was unsecured. As subprime lending took huge hits HSBC took huge hits. In reality had HSBC not purchased Household International the bank would have little or no exposure to subprime at all. So much for hindsight. Cerberus could get a real deal on HSBC Finance Corporation.

Cerberus would also get HSBC Auto Finance, which would blend well with their purchase of Chrysler. They would get the GM Card as part of HSBC credit card operations. Cerberus would get a lot of real estate with existing HFC and Beneficial offices, most of which are in strip malls. As a revenue generator that might work well for Cerberus, or closing them and laying off all HFC and Beneficial employees could allow Cerberus to immediately improve the bottom line.

The downside for Cerberus is they get us as part of the deal. Household – HSBC Watch will monitor Cerberus if operations at HSBC Finance Corporation do not change drastically. Here at Household – HSBC Watch we are tracking the $1300 stolen from one of our members and watching the knife used to stab my wife in the back. It began with Household International back around 1999 to 2000. It was easy for us to transition to HSBC because HSBC hired Household’s CEO William F. Aldinger III. Where Bill goes we go, so to speak. But Bill will not go to Cerberus. Of course he could become an advisor or consultant. One never knows.

In Greek mythology, Cerberus or Kerberos (“demon of the pit”) was the hound of Hades, a monstrous three-headed dog (sometimes said to have 50 or 100 heads) called a hellhound. Cerberus guarded the gate to Hades and ensured that spirits of the dead could enter, but none could exit (additionally, no living person was to come into Hades). With a description like that predatory lender Household International – reborn as HSBC Finance Corporation – would be a perfect fit. We will not speculate on advertising slogans.

And what about poor old Option One? H&R Block worked so hard to get rid of it. HSBC and H&R Block have a history together through high interest questionable income tax loans. HSBC caused H&R Block to get caught up in RICO through their tax relationship. Block said at one time that HSBC should bear some of the responsibility. That never hapened. HSBC has pulled the knife out of my wife’s back. They might use it to kill the Option One deal, selling Cerberus on HSBC Finance Corporation instead. There is no honor among thieves.