Finance

In this articleOMEGTraders work on the floor of the New York Stock Exchange.Brendan McDermid | Reuters(Click here to subscribe to the new Delivering Alpha newsletter.)For SPAC investors wanting to pick winners in the cooling market, one characteristic of blank-check deals has led to steady outperformance.The biggest make-or-break factor of a SPAC’s stock performance post-merger was the sponsor’s related experience, or lack thereof, according to Wolfe Research. The firm found that SPACs with “experienced operators,” meaning the blank check sponsor CEO or chair had direct operating experience in the industry of the acquired company, recorded big returns, on average.Shares of deals with seasoned leaders tend to outperform those without by a wide margin during one-month, three-month, six-month and one-year periods after the mergers close, according to Wolfe Research. One year out, SPACs with experienced operators averaged a 73% rally, whereas those lacking an industry veteran suffered a 14% loss on average, the firm said.”We found the strongest differentiating characteristic of De-SPAC stock performance was the presence / absence of an experienced operator,” Chris Senyek of Wolfe Research, said in a note.SPAC issuance down nearly 90%After a record first quarter, the SPAC market has slowed down as regulatory pressure increased and supply reached unsustainable levels. SPAC issuance fell 87% in the second quarter to a total of $13 billion, according Barclays data. To be sure, the current pipeline of pending SPAC IPOs remains high at $71 billion, Barclays data showed.SPACs, or special purpose acquisition companies, raise capital in an initial public offering and use the cash to merge with a private company and take it public, usually within a two-year timeframe.Faced with deadline pressure in a volatile market, some SPACs had to settle for less ideal targets, and in some cases, throw their entire blueprint out the window. CNBC previously reported that a leisure SPAC merged with a biotech firm, while a cannabis blank-check company ended up doing a deal with a space company.The explosive popularity of SPACs last year also attracted a slew of celebrities new to Wall Street to jump on the bandwagon. The Securities and Exchange Commission previously issued a warning against those deals backed by public figures, urging investors to think twice before jumping in.Many SPAC stocks have wiped out their 2021 rally as the market cooled. The proprietary CNBC SPAC Post Deal Index, which is comprised of the largest SPACs that have announced a target or those that have already completed a SPAC merger within the last two years, is about flat on the year as of Friday. At its 2021 peak, the index was up double digits.— CNBC’s Nate Rattner and MIchael Bloom contributed to this story.Enjoyed this article?For exclusive stock picks, investment ideas and CNBC global livestreamSign up for CNBC ProStart your free trial now More

SINGAPORE — The next global pandemic could happen at any time and the world must start preparing for it now, said Singapore’s Senior Minister Tharman Shanmugaratnam.”We don’t have the luxury of waiting for Covid to be over before we start preparing for the next pandemic, because the next pandemic can come any time,” Tharman told CNBC’s Annette Weisbach at the G-20 summit in Italy.”So we’ve got to use our current effort to tackle Covid, to also build up the capacities required to head off the next pandemic,” he added.The World Health Organization declared the Covid-19 outbreak a global pandemic in March last year. The coronavirus — which was first detected in China in late-2019 — has infected more than 186 million people and caused at least 4 million deaths worldwide, data compiled by Johns Hopkins University showed.CNBC Health & Science Read CNBC’s latest global coverage of the Covid pandemic:Here’s what you need to know about the lambda Covid variant New Covid outbreaks a top risk to economic recovery, OECD chief says  Pfizer says it is developing a Covid booster shot to target the highly transmissible delta variant  Americans will need masks indoors as U.S. heads for ‘dangerous fall’ with surge in delta Covid casesA G-20 panel of global experts on Friday released a report proposing measures to prevent outbreaks and quickly respond to any future pandemic. Tharman co-chairs the panel with former U.S. Treasury Secretary Larry Summers and World Trade Organization Director-General Ngozi Okonjo-Iweala.The measures include “better and more reliable funding” for the World Health Organization, as well as tapping multilateral institutions such as the World Bank and International Monetary Fund to help fund the fight against a pandemic, said Tharman.He added that the current international system to respond to a global pandemic is “fragmented” and “under-funded.” To plug that gap, the panel proposed setting up a new global fund with a minimum $10 billion a year, said the Singapore minister.”What’s lacking today in the global system, you’ve got health governance under the World Health Assembly and the WHO, you don’t have a system that brings finance together with health,” Tharman said.”And that’s why the system is under-funded. It reacts after the event, after a crisis has broken out and unable to proactively head off future crises,” he added. More

A Chinese day trader plays cards with others at a local brokerage house in Beijing on August 27, 2015, the summer of a dramatic sell-off in Chinese stocks.Getty ImagesBEIJING — While new Chinese regulation has hit pause on the Chinese IPO pipeline to the U.S. this summer, local start-up investors aren’t fazed.They have other options for reaping returns on their investments and say the rules help clear up some uncertainty.In the days since ride-hailing app Didi’s giant IPO on the New York Stock Exchange on June 30, Chinese regulators have announced, at a steady pace, new policies aimed at tightening control of data and the ability of companies to list overseas. Didi is down 14% from its offering price of $14 a share.On Saturday, China’s cyberspace regulator proposed that any company with data on more than 1 million users must go through a cybersecurity review before listing abroad. The regulator, whose clout in China has grown rapidly, said public comment on the proposed rules would close July 25.That followed an announcement last Tuesday from the top executive body and Chinese Communist Party’s central committee about cracking down on illegal securities activities, which included greater scrutiny on private equity and venture capital funds, as well as raising money overseas through stock.”There is no impact at all on exits, investment direction and investment stage” for a firm like ours, Michael Xu, managing partner at China-based CEC Asset Management, said Thursday, referring to the increased securities regulation. That’s according to a CNBC translation of his Mandarin-language remarks.The only aspect the firm would need to pay more attention to is whether investment projects had any shareholders without a clean record with the securities regulator, Xu said.Large tech giants like Alibaba and Tencent, who have backed a significant number of companies listed in the U.S., have also fallen under heavy scrutiny in China’s crackdown on monopolistic practices in the last year.Looking to other IPO marketsInvestor interest in China has climbed. Deal value from venture capital and private equity-backed buyouts reached $74.3 billion in the first quarter of this year, according to Preqin. That’s the most for any six-month period since the first half of 2018.Getting returns on such investments are the priority, said Jeff Wu, a China-focused partner at Silicon Valley-based Pegasus Tech Ventures. In light of the latest market developments, he said he’s looking to exit investments via listings in Hong Kong or special purpose acquisition companies overseas.However, mainland China has struggled with its own effort to keep tech IPOs at home. Authorities launched the Star board in Shanghai in July 2019, featuring a registration system for IPOs, rather than regulatory approval.That registration-based IPO process has stalled. As of June 20, EY said more than 500 companies were on the Chinese securities regulator’s waiting list to go public on the Star board and a tech-focused stock board in Shenzhen called the ChiNext.”Chinese investors are not sophisticated enough yet, and the legal environment is not mature enough to accommodate such a registration process,” said Zhu Ning, a professor of finance at Tsinghua University.Read more about China from CNBC ProDan Niles says he’s now tempted to buy Chinese tech stocks – here are 2 of his favoritesDelisting of Chinese stocks on U.S. exchanges appears inevitable, Cowen saysCramer questions why anyone would buy a Chinese IPO ever again after Didi debacleHe noted that so far, Chinese securities law is “far less punitive” than it is in the U.S., and that recent securities regulation is “consistent with Chinese authorities’ continuous efforts to improve the requirements and standards of listing.””It’s important investors keep in their mind, China is still an emerging economy. No matter how fast-growing it is, the institutional background is still not the same,” he said.Increased Chinese government scrutiny on local companies listing in the U.S. comes as tensions between the two countries are wearing away at economic and financial ties that have built up between over the last few decades.Under the Trump administration, the White House began to call for less U.S. investment in Chinese assets. Since President Joe Biden took office in January, his administration has retained a tough stance on China.Consulting firm Eurasia Group said in a note over the weekend that fallout over Didi’s listing will intensify U.S. political pressure for restrictions on Chinese stock offerings. “In short, the spigot of Chinese IPOs in the US will likely run dry,” the authors said, pointing out that several Chinese firms have already canceled plans for IPOs in the U.S.Previously, Chinese companies had been going public in the U.S. at a record pace — accounting for 15% of the U.S. IPO market in the first half of the year, according to Renaissance Capital.One strategy Chinese companies have pursued recently is listing in both the U.S. and Hong Kong — protecting against delisting risks while capturing a large pool of institutional investors.This trend will likely continue, said Ming Liao, founder of Beijing-based Prospect Avenue Capital, which has had plans to list its invested companies in the U.S. He said the firm is “happy” with the latest regulatory developments because they specify the oversight of different agencies.Regulatory uncertainty persistsWhile investment funds look for other ways to exit their holdings, the Chinese government’s scrutiny on stock offerings isn’t going away.Beijing stated in the national five-year development plan adopted in March that authorities aim to “fully implement” a registration for stock issuance and improve the “quality” of listed companies, while strengthening efforts to ensure national security and crack down on monopolistic behavior.EY Asia-Pacific IPO Leader Ringo Choi said he expects overall uncertainty on IPOs to linger in the short term, as clarification on some policies could lead to other regulations. He noted that in China, one regulatory agency’s actions may compel another department to make similar moves. More

AN AIR OF hype habitually surrounds the founders of startups and their venture-capital backers: everyone is an evangelist for their latest project. But even allowing for that zeal, something astonishing is going on in fintech. Much more money is pouring into it than usual. In the second quarter of the year alone it attracted $34bn in venture-capital funding, a record, reckons CB Insights, a data provider (see chart 1). One in every five dollars invested by venture capital this year has gone into fintech.Deals are also proceeding at a frenetic pace. PitchBook, another data firm, reckons that venture-capital firms have together sold $70bn-worth of stakes in fintech startups so far this year, nearly twice as much as in the whole of 2020, itself a bumper year (see chart 2). These included 32 public listings, a first. Fintechs took part in 372 mergers and acquisitions in the first quarter, including 21 of $1bn or more.In the past few weeks Visa, a credit-card firm, has paid €1.8bn ($2.1bn) for Tink, a Swedish payments platform. JPMorgan Chase, America’s largest bank, has said it will buy OpenInvest, which provides sustainable-investment tools—its third fintech acquisition in six months. Upstarts, such as Raisin and Deposit Solutions, two German platforms that link banks with savers, are merging. Others are going public. On July 7th a listing in London valued Wise, a money-transfer firm, at $11bn. Other recent or planned multi-billion initial public offerings (IPOs) include that of Marqeta (a debit-card firm), Robinhood (a no-fee broker) and SoFi (an online lender).This blizzard of activity reflects demand from investors as they hunt for juicy returns and as the digital surge in finance takes off. But it also reveals something more profound. Once the insurgents of finance, fintech firms are becoming part of the establishment.The current investment boom has several novel features beyond its scale. For a start, it is increasingly focused on the biggest firms, says Xavier Bindel of JPMorgan. Smaller me-toos and startups with business models that have struggled during the pandemic are no longer in favour. The first quarter of 2021 saw the most funding rounds ever for private fintech startups valued above $100m; the median round raised $10m, a quarter more than in the same period last year.The location of activity has changed, too. Five years ago the fintech story centred on America and China. Today, Europe is catching up. A funding round in June valued Klarna, a Swedish “buy now, pay later” startup, at $46bn, making it the world’s second-most valuable private fintech firm. Revolut, a London-based neobank, is reportedly in talks to raise up to $1bn, which would value it at $30bn. Firms in Latin America and Asia, especially when led by Stanford-educated or Silicon-Valley-trained founders, have become magnets for investors. Nubank, Brazil’s biggest digital-only bank, for instance, is worth $30bn.The craze also extends beyond payments. A surge in savings in rich countries in the past year has boosted so-called “wealth-tech” startups, such as online brokers and investment advisers. Insurance-tech firms received $1.8bn through 82 deals globally in the first quarter of this year. Lending has proved trickier to disrupt—perhaps owing to regulators’ firmer grip on this area of finance—except when it crosses over into payments, as illustrated by the rise of Klarna and its rivals.This broadening out points to one explanation for the explosion in funding: the huge growth in the market for fintech offerings during the pandemic. Consumers and companies adjusted with rapidity and ease to the closure of bank branches and shops and the resulting digitisation of commerce and finance. Many of their new habits are likely to stick.Factors specific to fintech are also behind the big bang. Most of today’s fintech stars are not overnight successes but were set up in the early 2010s. Since then their user numbers have swollen to the many millions and they are nearing profitability. These have become big enough to appear on the radar screens of late-stage venture-capital and private-equity firms, such as America-based TCV (which has backed Trade Republic, a German variant of Robinhood), Japan’s SoftBank (a recent investor in Klarna) and Sweden’s EQT (which backed Mollie, a Dutch payments firm, last month).Moreover, some institutional investors—such as asset managers (BlackRock), sovereign-wealth funds (Singapore’s GIC) and pension funds (Canada’s Pension Plan Investment Board)—have made a lot of money by snapping up shares in big tech firms in recent years. These are now trying to gain an edge by investing in promising startups before they go public.The huge cheques from these investors come just as fintech firms are looking to write the next chapter. Most startups were created to “unbundle” finance: to carve out niches where they could offer a better service than the banks. Now, however, most successful firms are rebundling, adding new products in a bid to become platforms. Acquisitions provide a handy shortcut; their high valuations mean the big firms can often snap up smaller ones on the cheap by swapping equity.Stripe, the most valuable private fintech firm in the West, is a good example of the sector’s coming of age. It was set up a decade ago to help firms accept payments online. Now worth $95bn, it also offers services ranging from tax planning to fraud prevention. That breadth was partly achieved through acquisitions; since October it has bought three other firms.A similar logic animates credit-card giants, which are trying to hedge against innovations in online payments; and the banks, which see fintech as a way to plug gaps in their digital offerings, cut costs, and diversify away from lending. Goldman Sachs and JPMorgan are bringing lots of smaller acquisitions under the umbrella of new, versatile consumer apps. As a consequence, the distinction between fintech and traditional banking could eventually blur, predicts Nik Milanovic of Google Pay, the tech firm’s payments arm.Swipe rightAll this splurging and merging also carries risks. One is that the hefty prices paid for fintechs prove unjustified. Visa is buying Tink at a price that is 60 times the startup’s annual revenue; Wise is valued at around 20 times its revenues and 285 times its profits. Banks in particular may find out about promising fintech firms only once they are too expensive.Another risk is that competition and innovation are stifled. Founders of startups that have been acquired often leave at the end of their “vesting” period—the minimum amount of time they must stick around for before they can sell their shares, usually one to three years. The culture that allowed a firm to thrive could then wither. Fintechs bought by banks in particular could struggle: after a deal, cultures can clash; customers often leave. Most neobanks acquired by old ones, such as Simple (bought by BBVA, a Spanish bank), have been either shut down or sold.Nevertheless, one thing seems clear. Fintechs are inexorably gaining critical mass: their value has risen to $1.1trn, equivalent to 10% of the value of the global banking and payments industry, and up from 4% in 2018. Prices may be stretched today and some firms may flop, but in the long run it seems likely that this share will only rise further. More

Traders work on the floor of the New York Stock Exchange.NYSEStock futures opened mostly flat late Sunday as earnings season kicks off this week.Futures on the Dow Jones Industrial Average added 25 points, or 0.07%. S&P 500 futures edged 0.08% higher and Nasdaq 100 futures rose 0.17%.The three major indexes closed at record highs on Friday after a sell-off Thursday as investors worried about a potential slowdown in U.S. economic growth. Friday’s rally brought the averages into the green for the week; the Dow added 0.24% week-to-date, while the S&P 500 and Nasdaq each rose about 0.4% in the same period.Stocks tied to the economic recovery that fell during Thursday’s session logged gains on Friday. Financial names rebounded, with Bank of America and Goldman Sachs both jumping more than 3%. Travel-related stocks also rose; Royal Caribbean popped 3.6%, Wynn Resorts gained close to 2%, and American Airlines and United Airlines both added more than 2%.The major averages’ record highs come ahead of the start of quarterly earnings reports. S&P 500 companies’ profits are expected to be up 65% from the same quarter a year ago, according to Refinitiv, bouncing back from the worst of the pandemic. The expected surge in profits would be the strongest earnings growth since the fourth quarter of 2009, as stocks recovered from the financial crisis.”The second quarter could be as good as it gets for economic growth,” Callie Bost, senior investment strategist at Ally Invest, said. “Earnings growth may slow, but analysts still expect S&P profits to grow by double digits in the next two quarters. It’s crucial not to lose faith in the market just because the economy’s strongest growth may be behind us.”JPMorgan Chase, Goldman Sachs and PepsiCo kick off earnings season with results due out before the bell on Tuesday. Bank of America, Citigroup, Wells Fargo, Delta Air Lines and BlackRock report on Wednesday, and Morgan Stanley, Truist and UnitedHealth post results on Thursday.Investors also anticipate important data to be released this week, including key readings on inflation on Tuesday and Wednesday, and June retail sales on Friday. More

In this articleBACGSJPMSPCEAMCRCLLUVUALAALA sign is displayed in the reception area of Goldman Sachs in Sydney, Australia.David Gray | ReutersCheck out the companies making headlines in midday trading.JPMorgan, Goldman Sachs, Bank of America — Bank stocks led the market comeback on Friday as bond yields rebounded. JPMorgan, Goldman Sachs and Bank of America climbed more than 3% each as the 10-year Treasury yield bounced 7.2 basis points to 1.36%. The benchmark yield tumbled to 1.25% at its low on Thursday, intensifying concerns about an economic slowdown.American Airlines, United Airlines — Airline stocks rebounded on Friday after losses associated with the highly infectious delta Covid variant fueled worries about the global economic comeback. Shares of American Airlines, United Airline, Southwest Airlines and Alaska Air Group all rose more than 2%.Carnival Corp., Norwegian Cruise Line, Royal Caribbean — Shares of reopening plays like cruise operators rose on Fridays, clawing back losses from the previous session. Carnival climbed about 2.3%, while Norwegian Cruise Line popped 2.8%. Royal Caribbean rallied 3.6%.Discover Financial Services — The credit card stock rose 6.2% after Citi upgraded the stock to buy from neutral following a change in analyst coverage. Citi said Discovery “has the clearest near-term path to benefit from the return of consumer card spending and lending as pandemic-related benefits expire and elevated payment rates return to lower levels.”General Motors — General Motors shares gained 4.8% after Wedbush initiated coverage of the stock with an outperform rating and $85 price target. That target implies an upside of more than 51% from Thursday’s close. “CEO Mary Barra along with other key executives has led the legacy auto company back to the top of the auto industry in the United States,” Wedbush’s Dan Ives said in a note.Levi Strauss — Shares of Levi Strauss added 1.4% after the retailer crushed Wall Street expectations in its fiscal second-quarter results. Levi reported adjusted earnings of 23 cents per share on revenue of $1.28 billion. Analysts expected earnings of 9 cents per share on revenue of $1.21 billion, according to Refinitiv.Didi and U.S.-listed Chinese companies — Shares ride-hailing company Didi rose 7.3% Friday, reversing course from a sell-off earlier this week after Chinese regulators announced a cybersecurity review of the company last week, days after Didi’s public debut on the New York Stock Exchange. The U.S.-traded shares of several other Chinese companies also rebounded. Tencent Music Entertainment Group added 1.5%, and Pinduoduo gained 2.1%. Baidu and Alibaba climbed more than 3%.Virgin Galactic — Shares of the space tourism company fell 6.6% after Susquehanna raised its price target on Virgin Galactic’s stock to $45 from $20 but reiterated its neutral rating on the stock and said its price has run too far, too fast.Signature Bank — The New York-based bank rose 6.4% after UBS reiterated its buy rating on it, driven in part by the company’s “early advantage” in crypto adoption combined with the reopening of New York City. Signature Bank is known for being friendly toward cryptocurrency businesses, which often find it challenging to secure banking relationships.Bumble, Match Group — The dating service stocks rose on Friday after RBC Capital Markets initiated coverage of both Bumble and Match at outperform. The firm said in a note to clients that online dating still has significant growth ahead. Shares of Bumble rose about 6%, while Match Group added 2.8%.AMC Entertainment — Shares of the movie-theater chain dropped 3.7% in midday trading as Wall Street analysts bemoaned the company’s decision not to issue more equity. AMC, a popular trade among Reddit users and now considered a “meme” stock, is making a “huge mistake for the shareholders to not allow the company to issue more stock at what we perceive to be highly inflated prices,” Loop Capital’s Alan Gould said in a note released Friday.— CNBC’s Maggie Fitzgerald, Jesse Pound, Yun Li, Tom Franck and Tanaya Macheel contributed reportingBecome a smarter investor with CNBC Pro. Get stock picks, analyst calls, exclusive interviews and access to CNBC TV. Sign up to start a free trial today More

U.S. Senator Elizabeth Warren (D-MA) questions Charles P. Rettig, commissioner of the Internal Revenue Service, during the Senate Finance Committee hearing titled The IRS Fiscal Year 2022 Budget, in Dirksen Senate Office Building in Washington, D.C., June 8, 2021.Tom Williams | Pool | ReutersWells Fargo’s decision to pull customers’ credit lines was lambasted by Sen. Elizabeth Warren.The bank has been notifying customers that their personal lines of credit would be closed, a move that could potentially damage their credit scores, CNBC reported Thursday.”Not a single customer should see their credit score suffer just because their bank is restructuring after years of scams and incompetence,” Warren, a Massachusetts Democrat, tweeted Thursday evening. “Sending out a warning notice simply isn’t good enough – Wells Fargo needs to make this right.”It was the latest controversy to afflict Wells Fargo since its fake accounts scandal emerged in 2016. Bank employees were found to have improperly created millions of unneeded accounts to hit aggressive sales goals. The Federal Reserve took the unusual step of constraining the bank’s balance sheet in 2018, a restriction that has forced it to shun deposits and pare products.Wells Fargo didn’t respond to a request to reply to Warren’s comments.The bank also hasn’t responded to emailed questions about why customer credit scores would be affected. However, by reducing the amount of credit a customer has available, the closures could raise their credit utilization ratios. This means borrowers would be using a greater percentage of their available credit, which may have a negative impact on their scores.Wells Fargo told customers it made the decision to cull the lines, which ranged from $3,000 to $100,000 in revolving credit, to focus on its credit cards and personal loans. Thursday, after publication of the CNBC piece, the bank issued this statement:”We realize change can be inconvenient, especially when customer credit may be impacted,” bank spokesman Manny Venegas said in an email. “We are providing a 60-day notice period with a series of reminders before closure, and are committed to helping each customer find a credit solution that fits their needs.”Become a smarter investor with CNBC Pro. Get stock picks, analyst calls, exclusive interviews and access to CNBC TV. Sign up to start a free trial today. More

In this articleWFCSmith Collection/Gado | Archive Photos | Getty ImagesWells Fargo is closing all existing personal lines of credit, CNBC reported on Thursday. Some customers are likely thinking: Now what?Fortunately, there are alternatives for clients looking for ready cash, according to financial experts.They may turn to other lenders that offer personal lines of credit or personal installment loans. Homeowners may consider opening a home equity line of credit, retirement savers could tap a 401(k) plan loan and those with certain types of life insurance may be able to borrow against the policy, for example.Each comes with its own advantages and caveats, experts said.”Every consumer is going to have different needs,” said Rachel Gittleman, financial services and membership outreach manager at the Consumer Federation of America, an advocacy group. “Make sure it’s something you can afford on a monthly basis on top of your typical expenses.”More from Personal Finance:It isn’t too late for millennials to build wealthNumber of workers unemployed for more than a year jumps by 248,000The stock market is falling. Should you sell?A personal line of credit is a type of unsecured loan, meaning it’s not backed by collateral. It offers flexibility to borrowers, who can borrow money at any time after the line is established.The sums involved are typically modest and often used for unplanned expenses or in other fast-cash scenarios like quick capital for business ventures, according to Greg McBride, chief financial analyst at Bankrate.But banks have also marketed them in other ways, such as loans for home improvement, he said.”To one person it’s debt consolidation, to another it’s home improvement, to someone else it’s a jet ski,” McBride said.Wells Fargo is closing all personal line of credit in coming weeks and no longer offers the product, CNBC reported Thursday. The revolving credit lines typically let users borrow $3,000 to $100,000.”We realize change can be inconvenient, especially when customer credit may be impacted,” according to a Wells Fargo statement. “We are providing a 60-day notice period with a series of reminders before closure, and are committed to helping each customer find a credit solution that fits their needs.”Wells Fargo clients can open personal lines of credit at other banks, McBride said. Many online lenders offer them and typically have a quick turnaround time, within 48 hours, he said.”[Personal lines of credit] have been offered for a long time, but it was never something the bigger banks were really committed to in a big way,” McBride said. “And that’s what created the opening for fintech firms or smaller, regional lenders to move into that space over the last 10 years or so.”Personal loans, another type of unsecured debt, are also an option, he said. They’re slightly less flexible than the line of credit, since clients borrow all the money upfront and repay it in regular monthly payments over a defined term, McBride said.(Wells Fargo still offers personal loans and credit cards, according to the company statement.)No product is going to be perfect. But you’re making more of an educated decision.Rachel Gittlemanfinancial services and membership outreach manager at the Consumer Federation of AmericaCertified financial planner Paul Auslander, director of financial planning at ProVise Management Group in Clearwater, Florida, has clients impacted by the Wells Fargo account closures.Auslander suggested they start a new banking relationship (he recommends a community bank) and, if they’re homeowners, that they apply for a home equity line of credit. The process may take about six weeks, he said.”The run-up in home prices means a lot of homeowners are sitting on more equity than they’ve ever seen,” McBride said.Those who own cash-value life insurance, like a whole life policy, may be able to borrow against the policy if it has accumulated cash value.”That’s the cheapest money available,” Auslander said,This option carries some caveats and risks, however. For one, the death benefit from the insurance policy is reduced by the loan amount and interest if it isn’t repaid over the owner’s lifetime.Retirement savers may also be able to take a loan from their 401(k) plan, Auslander said.Of course, this would reduce the size of their eventual nest egg, pulling money from investments likely to grow thanks to the power of compound interest.But 401(k) plan borrowers would essentially pay themselves back, with interest. Repayment must occur within five years, but terms may vary among employers.Around 83% of plans allow investors to borrow against their accounts, according to the Plan Sponsor Council of America. Almost all 401(k) plans require a minimum loan amount. Roughly 75% set a $1,000 minimum, according to the Council.Credit scores and feesSpiffyJ | E+ | Getty ImagesWells Fargo clients whose lines of credit are being closed should monitor their credit reports and credit scores, Consumer Federation of America’s Gittleman said. If available credit gets reduced drastically in a short time period, it may negatively impact one’s credit score, she said.Clients who see a drastic change can lodge a complaint with the Consumer Financial Protection Bureau, she said.The closure of any type of financial product may impact customer credit scores, according to a Wells Fargo official speaking on background. The company will report the account as being closed by the bank. Customers should continue making scheduled payments on time to ensure positive credit-bureau reporting, the official said.Consumers who want to replace a Wells Fargo line of credit with another type of loan should make an educated purchase by checking the product fees, Gittleman said. Reading through customer complaints in the CFPB database can help consumers understand product faults.”It’s not just the APR,” she said. “There are monthly or annual fees that will be part of what you’re paying back.”As a consumer, you have to make sure you’re able to pay that,” she added. “No product is going to be perfect.”But you’re making more of an educated decision.” More