Chairman and chief executive officer, Household International
Born: 1947, in Brooklyn, New York.
Education: Baruch School, City College of New York, BA, 1969; Brooklyn Law School, JD, 1975.
Family: Son of William F. Aldinger (dockworker); married Alberta (maiden name unknown); children: four.
Career: U.S. Trust Company, 1969–1975, various positions; Citibank Corporation, 1975–1986, various positions, including trust officer and vice president of private banking; Wells Fargo Bank, 1986–1994, various positions, including executive vice president of private banking group and vice chairman of private banking, consumer credit, and retail banking groups; Household International, 1994–1996, president and CEO; 1996–, chairman and CEO.
Awards: Distinguished Alumnus Award, Baruch College, 2004; Adam Smith Business Citizen Medal, 2004.
Address: Household International, 2700 Sanders Road, Prospect Heights, Illinois 60070; http://www.household.com/corp/index.jsp.
■ William F. Aldinger III was known for his leadership of Household International, the consumer-finance company acquired by the British banking firm HSBC in March 2003. Aldinger joined Household in 1994, and his accomplishments included shaping a multibusiness corporation into a lean, highly profitable firm focused on subprime lending and credit cards. Household was one of the largest consumer-finance firms in the United States in 2004. Under Aldinger, Household prospered, making acquisitions and encountering few challenges, until the early 2000s, when accusations of predatory lending by consumer activists culminated in a variety of lawsuits. A 2002 audit caused Household to restate its earnings for the previous nine years. These problems affected the stock price and made Household vulnerable to acquisition. According to former coworkers and analysts, Aldinger's priorities were
to reduce costs and build shareholder value; he was an introverted leader, more likely to avoid conversation than to seek it.
Aldinger grew up in Brooklyn, New York, where his parents, like his future customers, were more familiar with the services offered by Household than with those of traditional banks. Unlike banks, which offered a variety of services such as loans, safe deposit boxes, and federally insured savings accounts, consumer finance companies like Household specialized in personal and mortgage loans and were often patronized by working class, low-income customers. An article in the Guardian reported that Aldinger "has said his father's way of life and working class ethic were captured in the Marlon Brando film, On the Waterfront " (May 30, 2003).
After graduating from the Baruch School of City College of New York in 1969, Aldinger started working at the U.S. Trust Company, taking night classes at the Brooklyn Law School. He completed his law degree in 1975, the year he joined Citibank. As a vice president of sales at Citibank, he tested an incentive-compensation program designed to retain top salesmen, in part, by distributing financial awards annually instead of quarterly. An American Banker article quoted Aldinger as saying, "I like to keep the carrot dangling" (November 17, 1983). Aldinger left Citibank in 1986 to join the Wells Fargo Bank in San Francisco, where he held progressively important senior-leadership positions in the private-banking, consumer-credit, and retail-banking groups.
Following his employment with Wells Fargo, Aldinger joined Household International in 1994 as president and CEO, leaving the banking industry for the world of consumer finance that was familiar to him from his youth. Aldinger saw banking and consumer financing as different aspects of one industry—the money business.
When Aldinger joined Household, it had multiple businesses and an art collection. He sold the art collection and eliminated unprofitable divisions, such as consumer banking and stockbrokering, leaving the credit-card and consumer-finance divisions to become the core of a streamlined organization whose lending operations served subprime borrowers. Aldinger credited Household's success to its limited focus. He further demonstrated that focus in 1997 by purchasing the consumer-finance subsidiary of Transamerica and ACC Consumer Finance, a subprime automotive-finance firm. Household shareholders benefited; stock prices increased to $100 per share, a milestone. In 1998 Household merged with rival consumer-finance firm Beneficial.
In the early 2000s the consumer-activist organization ACORN (Association of Community Organizations for Reform Now) started accusing Household and other subprime lenders of predatory-lending practices, which included charging high interest rates, excessively high points, failing to explain the relationship between points and interest rates, and charging financial penalties to borrowers who paid off mortgages early. To Aldinger, prepayment penalties were an acceptable method of retaining customers in the flurry of mortgage refinancing effecting the industry. He felt that without sub-prime lenders like Household, many of these borrowers would have no access to credit at all.
The accusations continued, however, and in 2002 Household faced multiple lawsuits. One of the most significant was filed by financial regulators and the attorneys general of 19 states and the District of Columbia; the lawsuit was settled in October, 2002 and included the establishment of a $484 million restitution fund. Aldinger agreed to the settlement primarily to avoid more negative press. There were no fines or penalties. Household did, however, reform its lending practices.
Another problem occurred in August 2002 when Household restated its financial results for the previous nine years, beginning in 1994, reducing its earnings by $386 million. KPMG, Household's new auditing firm, recommended the revision, which addressed issues with three of Household's credit-card-marketing agreements.
As its stock prices fell, Household became an appealing purchase for the venerable British banking firm HSBC. The purchase was announced in November 2002 and finalized in March 2003. The final Household stock price was about $30 a share, which was considered low by analysts, but the merger improved Household's ability to access funding based on HSBC's capital strength and good credit ratings. One Chicago banking official, Steve Timbers, told Janet Stewart Kidd of the Chicago Tribune that "At the end of the day, Bill Aldinger is a bright guy, and whatever his reasons were, I'm sure he thought it through. He's not one to do anything dumb" (November 17, 2002).
Aldinger received a three-year contract to remain as head of HSBC's Household subsidiary, with a large (especially by the standards of British shareholders) compensation package of more than $50 million. He joined the HSBC board of directors in April 2003. The "Household" name began to be phased out in 2004.
Aldinger was an introverted leader who focused on business. He was intelligent, self-disciplined, and methodical. He served on the boards of MasterCard International, Illinois Tool Works, Children's Memorial Medical Center/Children's Memorial Hospital (a combined board), the Children's Memorial Foundation, Evanston Northwestern Healthcare, and other organizations. He was also on the board of trustees for Northwestern University and other educational institutions.
See also entry on Household International, Inc. in International Directory of Company Histories .
Kidd, Janet Stewart, "How Does Household's New Roof Fit Chicago?" Chicago Tribune , November 17, 2002.
Pratley, Nils, "Enter HSBC's 57M Dollars Man," Guardian (London), May 30, 2003.
Timmons, Heather, "Banker at the Helm of Household Makes Transition," American Banker , July 30, 1997, p. 8.
Tyson, David O., "Citibank Incentive Program Builds Current Fee Business," American Banker , November 17, 1983, p. 1.
—S. E. Weigant