Love the wordplay in the Forbes article “HSBC Sees Bleak House“. On the serioius side of things, the problem is bad enough that it forced HSBC (the world’s No. 3 bank by market capitalization) to issue a profit warning that lead to its stock price tanking. Quoting from the Forbes article, [K: emphasis mine]
- growing number of debt-ridden Americans defaulting on their mortgages have forced British banking giant HSBC Holdings to increase its provision for bad loans
- Chief Executive Michael Geoghegan said that the bank’s own analysis had found a “higher severity” of foreclosures and indicated that reserves for bad loans would rise to about $10.6 billion, 20% higher than the $8.8 billion predicted by analysts for fiscal 2006.
- Rising short-term interest rates have since hit a number of Americans with adjustable-rate mortgages and accelerated the rate of delinquency, particularly among HSBC’s more recent loans. The bank said in December that its biggest risk in the near term was personal lending in the U.S. (See: “Bad Debt Weighs On HSBC.”)
By the way, CME has some housing futures and options tools for people to hedge/manage/”gamble” risk in the housing market. Here is a FAQ in PDF.
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