Subprime losses by bank in 2007 show HSBC at number 1

Today we look back at early 2007 to see HSBC as a major factor in US subprime. The SEC provided a list of subprime mortgage write-offs early in the crisis. HSBC held the number one spot. Without a doubt HSBC also attracted the attention of regulators. Here are subprime write-offs, listed by bank:

HSBC – $10.6 billion (as of February 2007)
Merrill Lynch – $7.9 billion
Citigroup – $3.2 billion
JPMorgan – $1.7 billion
Goldman Sachs – $1.5 billion
Bank of America – $1.4 billion
Wachovia – $1.3 billion
Morgan Stanley – $940 million
Lehman – $700 million
Bear Sterns – $700 million
(courtesy of Mortgage Blues)

Analysis of subprime by 2010 revealed that with few exceptions so called “non bank entities” of regulated banks caused most of the problem. Lending wildly to those who could not repay, while creating loans that were so oppressive they could not be repaid, subprime was just a name. Crazy irresponsible lending simply caused a huge problem.

For HSBC losses were sometimes bigger because second mortgage loans through Household Finance (HFC) and Beneficial Finance (Beneficial) were immediate losses. First mortgages, including those made through HSBC’s Decsion One, didn’t perform well.