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Bruce Richards, Marathon Asset Management CEO, joins ‘Money Movers’ to discuss what opportunities have opened up now that the Fed has cut rates, where Richards is more bullish on credit, and much more.
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Tag: Banks
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Ishiba’s win seen as a ‘positive development’ for Japan’s banking sector: Goldman Sachs analyst
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Makoto Kuroda, Japan financials analyst at Goldman Sachs, says incoming Japanese Prime Minister Shigeru Ishiba is seen as the “continuity candidate who is less inclined to interfere with the independence of the [Bank of Japan].”
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China market investors adopting ‘Buy First Think Later’ approach: Wealth manager
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Magellan Capital's Britney Lam explains why she remains bullish on the Chinese market, and where she's still hoping to see more gains come through.
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Why JPMorgan Chase is prepared to sue the U.S. government over Zelle scams
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JPMorgan Chase CEO and Chairman Jamie Dimon gestures as he speaks during the U.S. Senate Banking, Housing and Urban Affairs Committee oversight hearing on Wall Street firms, on Capitol Hill in Washington, D.C., on Dec. 6, 2023.
Evelyn Hockstein | Reuters
Buried in a roughly 200-page quarterly filing from JPMorgan Chase last month were eight words that underscore how contentious the bank’s relationship with the government has become.
The lender disclosed that the Consumer Financial Protection Bureau could punish JPMorgan for its role in Zelle, the giant peer-to-peer digital payments network. The bank is accused of failing to kick criminal accounts off its platform and failing to compensate some scam victims, according to people who declined to be identified speaking about an ongoing investigation.
In response, JPMorgan issued a thinly veiled threat: “The firm is evaluating next steps, including litigation.”
The prospect of a bank suing its regulator would’ve been unheard of in an earlier era, according to policy experts, mostly because corporations used to fear provoking their overseers. That was especially the case for the American banking industry, which needed hundreds of billions of dollars in taxpayer bailouts to survive after irresponsible lending and trading activities caused the 2008 financial crisis, those experts say.
But a combination of factors in the intervening years has created an environment where banks and their regulators have never been farther apart.
Trade groups say that in the aftermath of the financial crisis, banks became easy targets for populist attacks from Democrat-led regulatory agencies. Those on the side of regulators point out that banks and their lobbyists increasingly lean on courts in Republican-dominated districts to fend off reform and protect billions of dollars in fees at the expense of consumers.
“If you go back 15 or 20 years, the view was it’s not particularly smart to antagonize your regulator, that litigating all this stuff is just kicking the hornet’s nest,” said Tobin Marcus, head of U.S. policy at Wolfe Research.
“The disparity between how ambitious [President Joe] Biden’s regulators have been and how conservative the courts are, at least a subset of the courts, is historically wide,” Marcus said. “That’s created so many opportunities for successful industry litigation against regulatory proposals.”
Assault on fees
Those forces collided this year, which started out as one of the most consequential for bank regulation since the post-2008 reforms that curbed Wall Street risk-taking, introduced annual stress tests and created the industry’s lead antagonist, the CFPB.
In the final months of the Biden administration, efforts from a half-dozen government agencies were meant to slash fees on credit card late payments, debit transactions and overdrafts, among other proposals. The industry’s biggest threat was the Basel Endgame, a sweeping plan to force big banks to hold tens of billions of dollars more in capital for activities like trading and lending.
“The industry is facing an onslaught of regulatory and potential legislative change,” Marianne Lake, head of JPMorgan’s consumer bank, warned investors in May.
JPMorgan’s disclosure about the CFPB probe into Zelle comes after years of grilling by Democrat lawmakers over financial crimes on the platform. Zelle was launched in 2017 by a bank-owned firm called Early Warning Services in response to the threat from peer-to-peer networks including PayPal.
The vast majority of Zelle activity is uneventful; of the $806 billion that flowed across the network last year, only $166 million in transactions was disputed as fraud by customers of JPMorgan, Bank of America and Wells Fargo, the three biggest players on the platform.
But the three banks collectively reimbursed just 38% of those claims, according to a July Senate report that looked at disputed unauthorized transactions.
Banks are typically on the hook to reimburse fraudulent Zelle payments that the customer didn’t give permission for, but usually don’t refund losses if the customer is duped into authorizing the payment by a scammer, according to the Electronic Fund Transfer Act.
A JPMorgan payments executive told lawmakers in July that the bank actually reimburses 100% of unauthorized transactions; the discrepancy in the Senate report’s findings is because bank personnel often determine that customers have authorized the transactions.
Amid the scrutiny, the bank began warning Zelle users on the Chase app to “Stay safe from scams” and added disclosures that customers won’t likely be refunded for bogus transactions.
JPMorgan declined to comment for this article.
Dimon in front
The company, which has grown to become the largest and most profitable American bank in history under CEO Jamie Dimon, is at the fore of several other skirmishes with regulators.
Thanks to his reputation guiding JPMorgan through the 2008 crisis and last year’s regional banking upheaval, Dimon may be one of few CEOs with the standing to openly criticize regulators. That was highlighted this year when Dimon led a campaign, both public and behind closed doors, to weaken the Basel proposal.
In May, at JPMorgan’s investor day, Dimon’s deputies made the case that Basel and other regulations would end up harming consumers instead of protecting them.
The cumulative effect of pending regulation would boost the cost of mortgages by at least $500 a year and credit card rates by 2%; it would also force banks to charge two-thirds of consumers for checking accounts, according to JPMorgan.
The message: banks won’t just eat the extra costs from regulation, but instead pass them on to consumers.
While all of these battles are ongoing, the financial industry has racked up several victories so far.
Some contend the threat of litigation helped convince the Federal Reserve to offer a new Basel Endgame proposal this month that roughly cuts in half the extra capital that the largest institutions would be forced to hold, among other industry-friendly changes.
It’s not even clear if the watered-down version of the proposal, a long-in-the-making response to the 2008 crisis, will ever be implemented because it won’t be finalized until well after U.S. elections.
If Republican candidate Donald Trump wins, the rules might be further weakened or killed outright, and even under a Kamala Harris administration, the industry could fight the regulation in court.
That’s been banks’ approach to the CFPB credit card rule, which aimed to cap late fees at $8 per incident and was set to go into effect in May.
A last-ditch effort from the U.S. Chamber of Commerce and bank trade groups successfully delayed its implementation when Judge Mark Pittman of the Northern District of Texas sided with the industry, granting a freeze of the rule.
‘Venue shopping’
A key playbook for banks has been to file cases in conservative jurisdictions where they are likely to prevail, according to Lori Yue, a Columbia Business School associate professor who has studied the interplay between corporations and the judicial system.
The Northern District of Texas feeds into the 5th Circuit Court of Appeals, which is “well-known for its friendliness to industry lawsuits against regulators,” Yue said.
“Venue-shopping like this has become well-established corporate strategy,” Yue said. “The financial industry has been particularly active this year in suing regulators.”
Since 2017, nearly two-thirds of the lawsuits filed by the U.S. Chamber of Commerce challenging federal regulations have been in courts under the 5th Circuit, according to an analysis by Accountable US.
Industries dominated by a few large players — from banks to airlines, pharmaceutical companies and energy firms — tend to have well-funded trade organizations that are more likely to resist regulators, Yue added.
The polarized environment, where weakened federal agencies are undermined by conservative courts, ultimately preserves the advantages of the largest corporations, according to Brian Graham, co-founder of bank consulting firm Klaros.
“It’s really bad in the long run, because it locks in place whatever the regulations have been, while the reality is that the world is changing,” Graham said. “It’s what happens when you can’t adopt new regulations because you’re terrified that you’ll get sued.”
— With data visualizations by CNBC’s Gabriel Cortes.
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Best emergency loans of October 2024
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Whether you’re facing a sudden home repair or unexpected medical expenses, if you’re in a pinch for cash, emergency loans may be able to help. Emergency loans are a type of personal loan so they generally have much more favorable interest rates and fees than payday loans.
CNBC Select rounded up the best emergency loans with fast applications and quick access to funds. We also considered factors like interest rates, fees, loan amounts and term lengths offered, plus other features including how your funds are distributed, any discounts and customer service options. (Read more about our methodology below.)
Compare personal loans
Best for low credit scores
Upstart Personal Loans
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Annual Percentage Rate (APR)
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Loan purpose
Debt consolidation, credit card refinancing, wedding, moving or medical
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Loan amounts
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Terms
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Credit needed
Credit score of 300 on at least one credit report (but will accept applicants whose credit history is so insufficient they don’t have a credit score)
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Origination fee
0% to 12% of the target amount
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Early payoff penalty
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Late fee
The greater of 5% of last amount due or $15, whichever is greater
Pros
- Open to borrowers with fair credit (minimum 300 score)
- Will accept applicants who have insufficient credit history and don’t have a credit score
- No early payoff fees
- 99% of personal loan funds are sent the next business day after completing required paperwork before 5 p.m. Monday through Friday
Cons
- High late fees
- Origination fee of 0% to 10% of the target amount (automatically withheld from the loan before it’s delivered to you)
- $10 fee to request paper copies of loan agreement (no fee for eSigned virtual copies)
- Must have a Social Security number
Who’s this for? Upstart is ideal if you have a poor credit score as it only requires a minimum score of 300. It also considers applicants who don’t have enough history to generate a credit score.
Standout benefits: Upstart looks at more factors than just your credit when reviewing applications, including your education and employment history. You can check your loan terms without a hard inquiry before you apply. Once approved, you can get the funds as quickly as the next business day.
Best for longest loan terms
LightStream Personal Loans
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Annual Percentage Rate (APR)
6.99% – 25.49%* APR with AutoPay
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Loan purpose
Debt consolidation, home improvement, auto financing, medical expenses, and others
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Loan amounts
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Terms
24 to 240 months* dependent on loan purpose
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Credit needed
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Origination fee
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Early payoff penalty
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Late fee
Terms apply. *AutoPay discount is only available prior to loan funding. Rates without AutoPay are 0.50% points higher. Excellent credit required for lowest rate. Rates vary by loan purpose.
Pros
- Same-day funding available through ACH or wire transfer (conditions apply)
- Loan amounts up to $100,000
- No origination fees, no early payoff fees, no late fees
- LightStream plants a tree for every loan
Cons
- Requires several years of credit history
- No option to pay your creditors directly
- Not available for student loans or business loans
- No option for pre-approval on website (but pre-qualification is available on some third-party lending platforms)
Who’s this for? LightStream is worth looking into if you want more time to repay your loan. It offers low annual percentage rates (APRs) and loan terms for as long as 20 years, the longest on this list.
Standout benefits: LightStream offers its users a $100 guarantee if they are not completely satisfied with their loan process.
Best for co-borrowers
LendingClub Personal Loans
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Annual Percentage Rate (APR)
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Loan purpose
Debt consolidation, major expenses, emergency costs, moving, weddings
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Loan amounts
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Terms
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Credit needed
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Origination fee
3.00% to 8.00% of the loan amount
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Early payoff penalty
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Late fee
15-day grace period to make payments with no penalty
Pros
- Co-borrowers are permitted
- No prepayment penalty
- Loan amounts as low as $1,000
- Quick application you can submit in just a few minutes
- Ability to check your rate without hurting your credit score
Cons
- Doesn’t accept co-signers
- Origination fee of 2% to 6% of the loan amount
- Only two loan terms to choose from (3 or 5 years)
Who’s this for? LendingClub is a great option if you want the option to add a co-borrower to your loan to potentially boost your approval odds. The co-borrower’s income and credit history will also be considered, and they will also be responsible for paying the debt.
Standout benefits: LendingClub offers a 15-day grace period to make payments to avoid any penalty fees.
Best for no credit
OneMain Financial Personal Loans
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Annual Percentage Rate (APR)
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Loan purpose
Debt consolidation, major expenses, emergency costs
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Loan amounts
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Terms
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Credit needed
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Origination fee
Origination fee starting at $25 to $500 or percentage ranging from 1% to 10% (depends on your state)
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Early payoff penalty
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Late fee
Up to $30 per late payment or up to 15% (depends on your state)
Terms apply.* Click here to see if you prequalify for a personal loan offer.
Pros
- Approves applicants with bad or fair credit
- No early payoff fees
- Reasonable loan minimums ($1,500) for smaller needs
- Can pre-qualify with a soft credit check (no hard inquiry right away)
- ACH funding within 1-2 business days (sometimes same day with proper paperwork)
- Option to apply for secured loan (with collateral) for potentially lower rates
- Borrowers can choose the date the bill is due each month
- Applicants may apply with a co-applicant or, if married, may apply for a loan separately from spouse
Cons
- High origination fee
- High interest rates
- No autopay APR discount
- No co-signers
*You must complete a loan application and continue to meet any criteria used to select you for a loan offer. Not all applicants are approved. Loan approval and actual loan terms depend on applicant’s state of residence and ability to meet OneMain Financial credit standards such as a responsible credit history, sufficient income after monthly expenses, and if applicable, availability of eligible collateral.
Not all approved applicants qualify for larger loan amounts, lower APRs, or the most favorable loan terms. For example, larger loan amounts typically require a first lien on a motor vehicle that is no more than ten years old, meets our value requirements, and is titled in applicant’s name with valid insurance. APRs are generally higher on loans not secured by a vehicle.
Example Loan: A $6,000 loan with a 24.99% APR that is repayable in 60 monthly installments would have monthly payments of $176.07.
OneMain charges origination fees allowed by law. Depending on the state where the loan is opened, the origination fee may be either a flat amount or a percentage of the loan amount. Flat fees vary by state, ranging from $25 to $500. Percentage-based fees vary by state, ranging from 1% to 10% of the loan amount subject to certain state limits on the fee amount.
For information about these fees and minimum and maximum loan sizes available in certain states, visit omf.com/loanfees.
Current OneMain Customers: Loan offers presented to a consumer assume the individual has no active loan with OneMain or one of its affiliates. If a customer applies for a new loan offer, a OneMain representative will discuss available options.
Active-duty military, their spouse or dependents covered by the Military Lending Act (MLA) may not pledge any vehicle as collateral. If you are covered by the MLA, you are not eligible for secured loans.Loan proceeds cannot be used for postsecondary educational expenses as defined by the CFPB’s Regulation Z such as college, university or vocational expense; for any business or commercial purpose; to purchase cryptocurrency assets, securities, derivatives or other speculative investments; or for gambling or illegal purposes.
Time to Fund Loans: Funding within one hour after loan closing through SpeedFunds® must be disbursed to a bank-issued debit card. Disbursement by check or ACH may take up to 1-2 business days after closing.
Who’s this for? OneMain Financial could be a good option if you have little or no credit history as it has no minimum credit score requirements.
Standout benefits: Once you accept your loan you could receive access to your funds in as little as one hour. OneMain Financial also doesn’t charge prepayment penalties if you pay off your loan balance earlier than expected.
Best for fair credit
Avant Personal Loans
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Annual Percentage Rate (APR)
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Loan purpose
Debt consolidation, major expenses, emergency costs, home improvements
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Loan amounts
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Terms
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Credit needed
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Origination fee
Administration fee up to 9.99%
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Early payoff penalty
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Late fee
Up to $25 per late payment after 10-day grace period
Click here to see if you prequalify for a personal loan offer. Terms apply.
Pros
- Lends to applicants with scores lower credit scores
- No early payoff fees
- Can pre-qualify with a soft credit check (no hard inquiry)
- Quick funding (often by the next day)
- Late payment grace period of 10 days
Cons
- Origination fee
- Potentially high interest (caps at 35.99% APR)
- No autopay APR discount
- No direct payments to creditors (for debt consolidation)
- No co-signers
Who’s this for? Avant appeals to those with fair credit scores as most of its customers have a score between 600 and 700.
Standout benefits: Avant offers a 10-day grace period to make payments without a penalty. It also has a user-friendly mobile app where you can receive notifications about your loan, change key dates and make payments.
Best for discounts
Upgrade Personal Loans
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Annual Percentage Rate (APR)
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Loan purpose
Debt consolidation/refinancing, home improvement, major purchase
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Loan amounts
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Terms
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Credit needed
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Origination fee
1.85% to 9.99%, deducted from loan proceeds
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Early payoff penalty
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Late fee
Up to $10 (with 15-day grace period)
Pros
- No early payoff fees
- Loans up to $50,000
- Fixed interest rates (no surprises)
- Can pay creditors directly (may take up to two weeks)
- Several available discounts including autopay
- Fast funding in as little as four days
Cons
- Origination fee of up to 9.99% (deducted from your loan)
- Not available in Washington D.C.
Why Upgrade is the best for financial literacy:
- Free credit score simulator to help you visualize how different scenarios and actions may impact your credit
- Charts that track your trends and credit health over time, helping you understand how certain financial choices affect your credit score
- Ability to sign up for free credit monitoring and weekly VantageScore updates
Who’s this for? Upgrade can help you save money thanks to its many discounts, such as for enrolling in autopay, using the loan to pay off existing debt and for having other eligible Upgrade products.
Standout benefits: Upgrade loans come with a 15-day grace period. Upgrade also offers secured loans that require collateral in exchange for a potentially better rate.
Best for large emergency loans
SoFi Personal Loans
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Annual Percentage Rate (APR)
8.99% – 29.49% when you sign up for autopay
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Loan purpose
Debt consolidation/refinancing, home improvement, relocation assistance or medical expenses
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Loan amounts
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Terms
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Credit needed
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Origination fee
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Early payoff penalty
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Late fee
Pros
- No origination fees required, no early payoff fees, no late fees
- Unemployment protection if you lose your job
- DACA recipients can apply with a creditworthy co-borrower who is a U.S. citizen/permanent resident by calling 877-936-2269
- Can have more than one SoFi loan at a time (state-permitting)
- May accept offer of employment (to start within the next 90 days) as proof of income
- Co-applicants may apply
Cons
- Applicants who are U.S. visa holders must have more than two years remaining on visa to be eligible
- No co-signers allowed (co-applicants only)
Fixed rates from 8.99% APR to 29.49% APR reflect the 0.25% autopay interest rate discount and a 0.25% direct deposit interest rate discount. SoFi rate ranges are current as of 02/06/2024 and are subject to change without notice. The average of SoFi Personal Loans funded in 2022 was around $30K. Not all applicants qualify for the lowest rate. Lowest rates reserved for the most creditworthy borrowers. Your actual rate will be within the range of rates listed and will depend on the term you select, evaluation of your creditworthiness, income, and a variety of other factors.
Who’s this for? SoFi could be a good fit if you’re looking to take out a large emergency loan as it has high upper limits of $100,000.
Standout benefits: If you’re planning to use your loan to pay down credit card debt, SoFi offers Direct Pay, which will pay your credit card company directly using your loan funds. It also offers a 0.25% discount on your APR for signing up for autopay and doesn’t charge any late fees, origination fees, or prepayment penalties.
Best for peer-to-peer loans
Prosper Personal Loans
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Annual Percentage Rate (APR)
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Loan purpose
Debt consolidation/refinancing, home improvement, auto/motor, medical or dental, big purchase and more
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Loan amounts
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Terms
24, 36, 48, and 60 months
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Credit needed
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Origination fee
1%-9.99%, deducted from loan proceeds
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Early payoff penalty
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Late fee
5% of monthly payment amount or $15, whichever is greater (with 15-day grace period)
Pros
- Co-borrowers are permitted
- Repeat borrowers may qualify for APR discounts
- Option to change your payment date according to when works best for you
- Wide range of loan amounts
- No prepayment penalty
Cons
- High late fees
- Origination fee of 1% to 9.99%, deducted from loan proceeds
Who’s this for? Prosper is worth considering if you are looking for an alternative lender than a big bank or credit union.
Standout benefits: Prosper is a peer-to-peer lender and allows you to use a co-applicant to boost your approval odds or lower your rate. You can check your rates before applying without affecting your credit score.
Best for same-day funding
Rocket Loans
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Annual Percentage Rate (APR)
8.99% to 29.99% *rate without autopay discount
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Loan purpose
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Loan amounts
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Terms
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Credit needed
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Origination fee
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Early payoff penalty
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Late fee
Pros
- No early payoff fee
- Offers autopay discount
- Can receive your funds as soon as the same business day
Cons
- Charges a late fee
- Origination fee is quite high
Who’s this for? Rocket Loans offers you the ability to receive your funds within the same day of your approval depending on eligibility.
Standout benefits: Rocket Loans offers a discount for making automatic payments and doesn’t charge a prepayment penalty.
Best for secured options
Best Egg Personal Loan
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Annual Percentage Rate (APR)
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Loan purpose
Debt consolidation, home improvement, moving expenses, major purchases, adoption and more
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Loan amounts
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Terms
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Credit needed
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Origination fee
0.99%–9.99% of the loan amount
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Early payoff penalty
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Late fee
$15 fee if the borrower’s bank account has insufficient funds
Pros
- Possible to secure financing in as little as 24 hours
- An average APR discount of 20% compared to their unsecured loan*
- Factors besides credit scores are considered when applying
- Access to Best Egg Financial Health
Cons
- 0.99% to 9.99% origination fee
- Home may be difficult to sell or refinance before the secured loan is repaid
*The Best Egg Secured Loan is a personal loan secured using a lien against fixtures permanently attached to your home such as built-in cabinets, light fixtures, and bathroom vanities. Rest assured, your home itself will not be used as collateral.
Who’s this for? Best Egg offers both unsecured and secured loans which might appeal if you are still on the fence about some of your options.
Standout benefits: Best Egg offers a $150 gift card to you and a friend should you refer them and they complete the required steps.
More on our top emergency loans
Upstart
Upstart has originated over $39 billion in loans for its customers. It offers three and five-year loans between $1,000 and $50,000. It charges no prepayment penalty fees but its loans can still potentially come with high costs. For instance, you may have to pay up to 12% in origination fees. Funds can be disbursed as quickly as the next business day if you accept the loan before 5 p.m. EST Monday through Friday.
- Loan amounts: $1,000 to $50,000
- Loan terms: 36 and 60 months
- Credit needed: Credit score of 300 on at least one credit report, but may accept applicants with insufficient credit history
- Quickest funding time: 1 business day
LightStream
LightStream, part of Truist Bank, offers loans with competitive rates and flexible terms for people with good credit or higher. It doesn’t charge any origination, administration or early payoff fees and offers an autopay discount of .50% off your interest rate. If you get approved for an unsecured loan with a lower rate from a competing lender, LightStream promises to beat it by 0.10%.
- Loan amounts: $5,000 to $100,000
- Loan terms: 24 to 144 months
- Credit needed: Good
- Quickest funding time: Same day
LendingClub
OneMain Financial
OneMain Financial aims to provide nonprime customers access to credit. It has over 1,300 physical branches across 44 states. While there are no early payoff penalties, the lender charges origination fees of either a flat fee ranging from $25 to $500 or a percentage of the loan you’ve taken out, ranging from 1% to 10%, depending on your state. And while most personal loans are unsecured, OneMain Financial offers borrowers the option of using collateral to potentially receive better loan terms.
- Loan amounts: $1,500 to $20,000
- Loan terms: 24 to 60 months
- Credit needed: Poor/fair
- Quickest funding time: 1 hour after closing
Avant
Avant Personal Loans can be a good option for those who need money in a pinch. It works with applicants with credit scores as low as 580 and you can prequalify with only a soft inquiry. You can receive your funds as early as the next day, can borrow as little as $2,000 and as much as $35,000, and loan terms range from 24 to 60 months. While there are no early payoff penalties, there is an origination fee of up to 4.75% and a late fee of up to $25 after the 10-day grace period.
- Loan amounts: $2,000 to $35,000
- Loan terms: 24 to 60 months
- Credit needed: Poor/fair
- Quickest funding time: 1 business day
Upgrade
Upgrade was founded in 2016 and has since provided its users with over $31 billion in credit. You can borrow up to $50,000 with terms ranging from just two years to 84 months. The online application process can be completed in minutes and you can receive your funds as quickly as the same day.
If you have an Upgrade Rewards Checking Plus account and contribute a $1,000 monthly direct deposit, you can qualify for loan interest rates of up to 20% lower.
- Loan amounts: $1,000 to $50,000
- Loan terms: 24 to 84 months
- Credit needed: 600+
- Quickest funding time: 1 business day
SoFi
Founded in 2011, SoFi has helped its customers pay off over $34 billion in debt. You can receive up to $100,000 in personal loan funding, the largest amount available on this list. SoFi personal loans do not require origination fees and there’s a 0.25% interest rate reduction for signing up for autopay.
In addition to personal loans, SoFi offers a range of other financial products, such as checking and savings accounts, mortgages, investing accounts, credit cards, credit monitoring and more. SoFi customers also enjoy special perks like free personalized advice from a financial planner.
- Loan amounts: $5,000 to $100,000
- Loan terms: 24 to 84 months
- Credit needed: Good/excellent
- Quickest funding time: Same day
Prosper
Prosper was started in 2005 with the goal of helping their customers achieve financial well-being through their reasonable rates and quick approvals. It offers a peer-to-peer personal loan marketplace that provides an alternative to large financial institutions. Origination fees are between 2.41% to 5% and get deducted from the loan proceeds. Similar to many lenders, checking your rate with Prosper will not impact your credit score. If approved, you can have your money deposited into your bank account in as little as one business day.
- Loan amounts: $2,000 to $50,000
- Loan terms: 24, 36, 48 or 60 months
- Credit needed: 640+
- Quickest funding time: 1 business day
Rocket Loans
Rocket Loans is one of the sister companies of Rocket Mortgage, one of the nation’s largest mortgage lenders. Rocket Loans can provide same-day funding and doesn’t charge a prepayment penalty. It only offers two repayment terms: three or five years.
- Loan amounts: $2,000 to $45,000
- Loan terms: 36 or 60 months
- Credit needed: Not disclosed
- Quickest funding time: Same day
Best Egg
Best Egg aims to provide users with the financial products they need to succeed. It offers secured and unsecured personal loans of up to $50,000, though the maximum may be slightly lower in some states. Borrowers are charged an origination fee of 0.99% to 8.99% which is deducted from the loan proceeds. According to the site, about half of its customers get their funds the next day. To be considered for a term of up to 84 months, you must apply for the secured loan option. Otherwise, the maximum loan term is 60 months.
- Loan amounts: Up to $50,000
- Loan terms: 36 to 84 months
- Credit needed: Not disclosed
- Quickest funding time: 1 business day
What is an emergency loan?
An emergency loan often refers to a shorter-term, unsecured loan, that can provide you with funds quickly to cover an unexpected financial need. The timeline is a key part of emergency loans as they are typically paid off within one to three years — more traditional loan lenders often have repayment terms of around one to seven years, with some even longer.
Paying off your loan quickly means you’ll pay less in interest compared to the same loan with a longer repayment term. Similarly to other loans, having a strong credit score will often benefit you through more favorable terms.
How to choose an emergency loan
There are a few factors to consider when choosing an emergency loan, including:
- Eligibility: Each lender is going to have a different standard for approving loans, so knowing your credit score and other financial info can help you narrow down your selection.
- APR: A lower APR means lower interest payments, so shopping around for lower rates before committing to your loan could end up saving you a chunk of change.
- Payment timeline: Generally emergency loans have shorter repayment terms, but its most important to pick a timeline you feel confident you can meet financially.
- Funding time: With emergency loans time is of the essence, so once approved, you should be able to receive your money in a matter of days or even hours.
- Fees: It’s not uncommon for emergency loans to come with different fees, including an origination fee. None of the loans on this list charge early repayment fees.
FAQs
Do you have to have a credit score for an emergency loan?
While having a strong credit score will often mean you get more favorable loan rates, some lenders, like OneMain Financial, do not have a minimum credit score requirement.
What is the easiest loan to get approved for?
One of the easiest loan to get approved for is often a payday loan since it’s a short-term loan often used to bring used to bridge a financial gap. However, payday loans are considered a form of predatory lending by the National Association of Consumer Advocates and can charge exorbitant interest rates, some as high as 400%.
How quickly can you get an emergency loan?
The exact timeline will vary depending on several factors, but many emergency loans you can get approved for and receive funds on the same day or one business day later.
What qualifies as an emergency loan?
While the exact definition may vary between institutions, emergency loans are frequently shorter-term, unsecured loans meant to cover urgent needs ranging from car repairs to medical bills and more.
Can you pay back personal loans early?
While some lenders may charge for this privilege, every lender on this list allows its loans to be paid back early with no prepayment penalties.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every personal loan review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of personal loan products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics. See our methodology for more information on how we choose the best emergency loans.
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Our methodology
To determine which emergency loans may be the best fit for applicants, CNBC Select analyzed dozens of U.S. personal loans offered by both online and brick-and-mortar banks, including large credit unions. Some of those options may have origination fees. We also considered CNBC Select audience data when available, such as general demographics and engagement with our content and tools.
When narrowing down and ranking the best personal loans, we focused on the following features:
- Fixed-rate APR: With a fixed-rate APR, you lock in an interest rate for the duration of the loan’s term, which means your monthly payment won’t vary.
- Flexible loan lengths: Each lender provides multiple loan lengths to select from.
- No early payoff penalties: The lenders on our list do not charge you for paying off loans early.
- Streamlined application process: We considered whether lenders offered same-day approval decisions and a fast online application process.
- Customer support: Every provider on our list has customer service available via telephone, email or online messaging.
- Unsecured loans: Every provider on this list offers unsecured loans, while some may also offer secured loans.
- Fund disbursement: The loans on our list deliver funds promptly and securely, some within the same day of approval.
- Creditor payment limits and loan sizes: The above lenders provide loans in an array of sizes, from $1,000 to $100,000. Each lender advertises its respective payment limits and loan sizes, and completing a preapproval process can give you an idea of what your interest rate and monthly payment would be for such an amount.
We also considered CNBC Select audience data when available, such as general demographics and engagement with our content and tools.
The rates and fee structures advertised for personal loans are subject to fluctuate in accordance with the Fed rate. However, once you accept your loan agreement, a fixed-rate APR will guarantee your interest rate and monthly payment will remain consistent throughout the entire term of the loan. Your APR, monthly payment and loan amount depend on your credit history and creditworthiness. To take out a loan, many lenders will conduct a hard credit inquiry and request a full application, which could require proof of income, identity verification, proof of address and more.
Catch up on CNBC Select’s in-depth coverage of credit cards, banking and money, and follow us on TikTok, Facebook, Instagram and Twitter to stay up to date.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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Commerzbank and UniCredit set to meet as takeover prospect looms
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A Commerzbank AG bank branch, in the financial district of Frankfurt, Germany, on Thursday, Sept. 12, 2024.
Krisztian Bocsi | Bloomberg | Getty Images
Commerzbank and UniCredit are set to begin talks Friday, with the German bank on the defensive over a potential takeover after its Italian counterpart unexpectedly increased its stake earlier this month.
Incoming Commerzbank Chief Executive Bettina Orlopp on Thursday said the two banks would “exchange views” Friday, Reuters reported. Speaking at a financial conference, Orlopp said the German bank was open minded, but that the speed of synergies and risks needed to be considered.
UniCredit earlier this month took a 9% stake in Commerzbank, before looking to boost it to 21% earlier this week and putting in a request to hold as much as a 29.9% stake in the German bank, hinting at a potential takeover bid. The action took the German government, which also owns a stake in the bank, and the management of Commerzbank by surprise.
Orlopp said Thursday she would not get involved with “crazy” sell-downs or “stupid things,” according to Reuters.
A 10-year veteran of Commerzbank, Orlopp was announced Tuesday as the incoming CEO, replacing Manfred Knof who is set to leave the bank at the end of this month.
Her comments on Thursday came as the bank’s board of managing directors and supervisory board unanimously said they supported Commerzbank’s current strategy at an annual meeting. Germany’s second-largest lender said in a Thursday statement that the implementation of its strategy plans until 2027 was “progressing rapidly.”
“Commerzbank is continuously expanding its independent position as a strong pillar in the German banking market and a reliable partner to the domestic economy,” Jens Weidmann, chairman of the supervisory board, commented.
The statement also noted that the board of managing directors was now expecting the bank’s return on tangible equity and payouts to shareholders to be bigger than so far anticipated.
The potential for a takeover or merger has been met with opposition from Germany’s government and several senior figures at Commerzbank. Supervisory board member Stefan Wittmann this week told CNBC he hoped a hostile takeover could be avoided, and said major job losses could occur if it became a reality.
Some investors however have in recent days suggested they would be open to talks about a potential merger.
Orlopp herself earlier this month told journalists that the process had taken Commerzbank by surprise, but urged a calm approach.
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We believe in bank consolidation, Banco Sabadell CEO says
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César González-Bueno, CEO of Banco Sabadell, discusses consolidation in the banking sector.
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BNP Paribas CFO says AXA fund ‘is a really good fit’ for the French bank
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BNP Paribas Chief Financial Officer Lars Machenil discusses the bank’s strategy and its push to buy the investment business of insurer AXA.
02:33
a minute ago
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Banco Sabadell CEO says BBVA bid is a ‘very volatile offer’
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Banco Sabadell CEO César González-Bueno told Charlotte Reed in an exclusive interview that BBVA’s takeover proposal is a “very volatile” offer with a “completely insufficient” price.
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France’s biggest lender says there are ‘too many’ European banks as UniCredit moves on Commerzbank
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A sign on the exterior of a BNP Paribas SA bank branch in Paris, France, on Friday, Aug. 2, 2024.
Bloomberg | Bloomberg | Getty Images
France’s BNP Paribas on Thursday said there are simply too many European lenders for the region to be able to compete with rivals from the U.S. and Asia, calling for the creation of more homegrown heavyweight banking champions.
Speaking to CNBC’s Charlotte Reed at the Bank of America Financials CEO Conference, BNP Paribas Chief Financial Officer Lars Machenil voiced his support for greater integration in Europe’s banking sector.
His comments come as Italy’s UniCredit ups the ante on its apparent takeover attempt of Germany’s Commerzbank, while Spain’s BBVA continues to actively pursue its domestic rival, Banco Sabadell.
“If I would ask you, how many banks are there in Europe, your right answer would be too many,” Machenil said.
“If we are very fragmented in activity, therefore the competition is not the same thing as what you might see in other regions. So … you basically should get that consolidation and get that going,” he added.
Milan-based UniCredit has ratcheted up the pressure on Frankfurt-based Commerzbank in recent weeks as it seeks to become the biggest investor in Germany’s second-largest lender with a 21% stake.
UniCredit, which took a 9% stake in Commerzbank earlier this month, appears to have caught German authorities off guard with the potential multibillion-euro merger.
German Chancellor Olaf Scholz, who has previously called for greater integration in Europe’s banking sector, is firmly opposed to the apparent takeover attempt. Scholz has reportedly described UniCredit’s move as an “unfriendly” and “hostile” attack.
Germany’s position on UniCredit’s swoop has prompted some to accuse Berlin of favoring European banking integration only on its own terms.
Domestic consolidation
BNP Paribas’s Machenil said that while domestic consolidation would help to stabilize uncertainty in Europe’s banking environment, cross-border integration was “still a bit further away,” citing differing systems and products.
Asked whether this meant he believed cross-border banking mergers in Europe appeared to something of a farfetched reality, Machenil replied: “It’s two different things.”
“I think the ones which are in a nation, economically, they make sense, and they should, economically, happen,” he continued. “When you look at really cross border. So, a bank that is based in one country only and based in another country only, that economically doesn’t make sense because there are no synergies.”
Earlier in the year, Spanish bank BBVA shocked markets when it launched an all-share takeover offer for domestic rival Banco Sabadell.
The head of Banco Sabadell said earlier this month that it is highly unlikely BBVA will succeed with its multi-billion-euro hostile bid, Reuters reported. And yet, BBVA CEO Onur Genç told CNBC on Wednesday that the takeover was “moving according to plan.”
Spanish authorities, which have the power to block any merger or acquisition of a bank, have voiced their opposition to BBVA’s hostile takeover bid, citing potentially harmful effects on the county’s financial system.
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UniCredit’s pursuit of Commerzbank reflects a watershed moment for Europe — and its banking union
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A man shelters from the rain under an umbrella as he walks past the Euro currency sign in front of the former European Central Bank (ECB) building in Frankfurt am Main, western Germany.
Kirill Kudryavtsev | Afp | Getty Images
European banking’s latest takeover battle is widely regarded as a potential turning point for the region — particularly the bloc’s incomplete banking union.
Italy’s UniCredit has ratcheted up the pressure on Frankfurt-based Commerzbank in recent weeks as it seeks to become the biggest investor in Germany’s second-largest lender with a 21% stake.
The Milan-based bank, which took a 9% stake in Commerzbank earlier this month, appears to have caught German authorities off guard with the potential multibillion-euro merger.
“The long-discussed move by UniCredit, Italy’s number one bank, to seek control of Germany’s Commerzbank is a watershed for Germany and Europe,” David Marsh, chairman of London-based OMFIF, an organization that tracks central banking and economic policy, said Tuesday in a written commentary.
Whatever the outcome of UniCredit’s swoop on Commerzbank, Marsh said the episode marks “another huge test” for German Chancellor Olaf Scholz.
The embattled German leader is firmly opposed to the apparent takeover attempt and has reportedly described UniCredit’s move as an “unfriendly” and “hostile” attack.
“The dispute between Germany and Italy over UniCredit’s takeover manoeuvres – branded by Scholz an unfriendly act – threatens to inflame relations between two of the Big Three member states of the European Union,” Marsh said.
“A compromise could still be found,” he continued. “But the hostility developing in Italy and Germany could scupper any meaningful steps towards completing banking union and capital markets integration, which all sides say is necessary to drag Europe out of its malaise.”
What is Europe’s banking union?
Designed in the wake of the 2008 global financial crisis, the European Union’s executive arm in 2012 announced plans to create a banking union to make sure that lenders across the region were stronger and better supervised.
The project, which became a reality in 2014 when the European Central Bank assumed its role as a banking supervisor, is widely considered to be incomplete. For instance, the lack of a European deposit insurance scheme (EDIS) is one of a number of factors that has been cited as a barrier to progress.
European leaders, including Germany’s Scholz, have repeatedly called for greater integration in Europe’s banking sector.
OMFIF’s Marsh said Germany’s opposition to UniCredit’s move on Commerzbank means Berlin “now stands accused of favouring European banking integration only on its own terms.”
A spokesperson for Germany’s government did not immediately respond when contacted by CNBC for comment.
The logo of German bank Commerzbank seen on a branch office near The Commerzbank Tower in Frankfurt.
Daniel Roland | Afp | Getty Images
Hostile takeover bids are not common in the European banking sector, although Spanish bank BBVA shocked markets in May when it launched an all-share takeover offer for domestic rival Banco Sabadell.
The head of Banco Sabadell said earlier this month that it is highly unlikely BBVA will succeed with its multi-billion-euro hostile bid, Reuters reported. And yet, BBVA CEO Onur Genç told CNBC on Wednesday that the takeover was “moving according to plan.”
Spanish authorities, which have the power to block any merger or acquisition of a bank, have voiced their opposition to BBVA’s hostile takeover bid, citing potentially harmful effects on the county’s financial system.
Mario Centeno, a member of the European Central Bank’s Governing Council, told CNBC’s “Street Signs Europe” on Tuesday that European policymakers have been working for more than a decade to establish a “true banking union” — and continue to do so.
The unfinished project means that the intervention framework for banking crises continues to be “an awkward mix” of national and EU authorities and instruments, according to Brussels-based think tank Bruegel.
Asked whether comments opposing banking consolidation from leading politicians in both Germany and Spain were a source of frustration, the ECB’s Centeno replied, “We have been working very hard in Europe to bring [the] banking union to completion. There are still some issues on the table, that we all know.”
What happens next?
Thomas Schweppe, founder of Frankfurt-based advisory firm 7Square and a former Goldman mergers and acquisitions banker, said Germany’s decision — intentional or otherwise — to sell a small 4.5% stake to UniCredit earlier this month meant the bank was now “in play” for a potential takeover.
“I think we are, you know, proposing a European banking landscape and also in Germany, they are a proponent of strong European banks that have a good capital base and are managed well,” Schweppe told CNBC’s “Squawk Box Europe” on Wednesday.
“If we mean this seriously, I think we need to accept that European consolidation also means that a German bank becomes the acquired party,” he added.
Asked for a timeline on how long the UniCredit-Commerzbank saga was likely to drag on, Schweppe said it could run for months, “if not a year or more.” He cited a lengthy regulatory process and the need for talks between all stakeholders to find a “palatable” solution.
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SEC charges Merrill Lynch, Harvest Volatility Management for ignoring client investment limits
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A logo for financial service company Merrill Lynch is seen in New York.
Emmanuel Dunand | Afp | Getty Images
The Securities and Exchange Commission charged Harvest Volatility Management and Merrill Lynch on Wednesday for exceeding clients’ predesignated investment limits over a two-year period.
Merrill, owned by Bank of America, and Harvest have agreed in separate settlements to pay a combined $9.3 million in penalties to resolve the claims.
Harvest was the primary investment adviser and portfolio manager for the Collateral Yield Enhancement Strategy, which traded options in a volatility index aimed at incremental returns. Beginning in 2016, Harvest allowed a plethora of accounts to exceed the exposure levels that investors had already designated when they signed up for the enhancement strategy, with dozens passing the limit by 50% or more, according to the SEC’s orders.
The SEC said Merrill connected its clients to Harvest while it knew that investors’ accounts were exceeding the set exposure levels under Harvest’s management. Merrill also received a cut of Harvest’s trading commissions and management and incentive fees, according to the agency.
Both Merrill and Harvest received larger management fees while investors were exposed to greater financial risks, the SEC said. Both companies were found to neglect policies and procedures that could have been adopted to alert investors of exposure exceeding the designated limits.
“In this case, two investment advisers allegedly sold a complex options trading strategy to their clients, but failed to abide by basic client instructions or implement and adhere to appropriate policies and procedures,” said Mark Cave, associate director of the SEC’s enforcement division. “Today’s action holds Merrill and Harvest accountable for dropping the ball in executing these basic duties to their clients, even as their clients’ financial exposure grew well beyond predetermined limits.”
A representative from Bank of America said the company “ended all new enrollments with Harvest in 2019 and recommended that existing clients unwind their positions.”
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BBVA CEO says Banco Sabadell merger would be good for Spain
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BBVA CEO Onur Genç tells Charlotte Reed in an exclusive interview, that the firm’s potential merger with Banco Sabadell would be good for Spain, despite concerns from the country’s government.
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Bettina Orlopp: The woman tasked with leading Commerzbank amid UniCredit takeover battle
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Bettina Orlopp, chief financial officer of Commerzbank AG, speaks during a fourth quarter earnings news conference at the bank’s headquarters in Frankfurt, Germany, on Thursday, Feb. 13, 2020.
Alex Kraus | Bloomberg | Getty Images
Commerzbank announced Tuesday it has picked 10-year veteran, and current Chief Financial Officer Bettina Orlopp to helm the bank as chief executive as it seeks to fend off a potential hostile takeover from Italian bank UniCredit.
The bank has been on the defensive as UniCredit looks to become its largest shareholder, signaling the potential for a full takeover.
Earlier this month, the Milan-based bank started building its shareholding with a 9% stake in Commerzbank. UniCredit then announced this week it had acquired additional Commerzbank shares, taking its stake in the German lender to around 21%, and submitted a request to increase its holdings to 29.9%.
Senior officials at Commerzbank and the German government, which was the company’s largest shareholder until UniCredit stepped in, have both said they oppose a hostile takeover. Orlopp will now be put in charge of leading the fight.
Commerzbank said in a late Tuesday statement that its supervisory board is aiming for current Chief Executive Manfred Knof to hand over his duties to Orlopp, “in the near future.” The firm added that the board had agreed unanimously on Orlopp succeeding Knof after an internal and external search for candidates.
Later on Wednesday the bank announced Knof will leave the company at the end of the month on September 30.
Orlopp’s contract is set out for five years, Commerzbank said, noting that the search for her replacement as CFO is still underway. The CFO said she was “looking forward to this new challenge,” while also noting that “significant tasks lie ahead.”
“Together with all our key partners, we will navigate through the challenges ahead of us successfully,” she said.
Need for a ‘credible CEO’
Since March 2020, Orlopp has been Commerzbank’s CFO, covering finance, investor relations, tax and treasury departments, according to her bio on the bank’s website. Most recently she was also the deputy chairwoman of the board of directors at the German bank, a position she has held since 2021.
The 54-year-old banker initially joined Commerzbank in 2014 as a divisional board member for group development and strategy. Since then, Orlopp has worked as an executive board member and then member of the board of managing directors overseeing areas including compliance, legal and human resources divisions.
Prior to her time at Commerzbank, Orlopp worked at McKinsey for 19 years. She holds a business administration diploma from the University of Regensburg, where she also completed a doctorate in finance.
Orlopp told journalists last week that current developments with UniCredit were unexpected, but urged calm.
“We have all been very surprised by the process,” she said according to Reuters. “That’s why the most important thing now is simply to sort it out calmly, to think about what’s on the table now and how to deal with it,” she added.
Other officials at Commerzbank have been more direct in sharing their concerns about a tie-up with the Italian bank. Stefan Wittman, supervisory board member at Commerzbank, on Tuesday told CNBC “we certainly hope we can avoid” a hostile takeover and warned that major job losses could occur if UniCredit took over.
This is not Orlopp’s first tumultuous time at Commerzbank. She was at the bank when it began the process of restructuring in 2016 and throughout periods of merger considerations, including interest from Deutsche Bank in 2018 and 2019.
When Orlopp became CFO in 2020, the bank was facing pressure from U.S. private equity group Cerberus, which at the time held an around 5% stake in Commerzbank, according to Reuters. The activist investor demanded personnel and strategy — including cost cutting — changes at the German lender.
The pressure from shareholders to reduce costs saw both the CEO and chairman of the supervisory board at the time, resign from their positions. Knof was then named CEO in 2020 and officially took on the role in 2021.
Thomas Schweppe, founder of 7Square, on Wednesday told CNBC that he believed it was important that the decision to make Orlopp CEO was taken quickly. “The situation is untenable. You cannot defend a company without a credible CEO,” he said.
Orlopp’s extensive experience at Commerzbank will allow her to hit the ground running, which is “very very important,” Schweppe said.
“At the same time obviously she has been part of some decisions that potentially led to the, you know, difficult situation Commerzbank finds itself now in,” he added.
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Commerzbank’s CEO pick Bettina Orlopp can hit the ground running, 7Square founder says
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Thomas Schweppe, the founder of 7Square and former Goldman Sachs M&A banker, discusses a potential Commerzbank and UniCredit merger and Commerzbank’s proposed new CEO Bettina Orlopp.
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Caught cold by UniCredit’s swoop on Commerzbank, Germany will want to avoid a national embarrassment
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A protestor holds a placard with a slogan reading “Stop Merger Horror” during a union demonstration outside the Commerzbank AG headquarters in Frankfurt, Germany, on Tuesday, Sept. 24, 2024.
Bloomberg | Bloomberg | Getty Images
Italy’s UniCredit appears to have caught German authorities off guard with a potential multibillion-euro merger of Frankfurt-based Commerzbank, a move that has triggered a fiery response from Berlin.
Market observers told CNBC that the swoop may have provoked a sense of national embarrassment among Germany’s government, which firmly opposes the move, while it’s been argued that the outcome of the takeover attempt could even put the meaning of the European project at stake.
Milan-based UniCredit announced on Monday that it had increased its stake in Commerzbank to around 21% and submitted a request to boost that holding to up to 29.9%. It follows UniCredit’s move to take a 9% stake in Commerzbank earlier this month.
“If UniCredit can take Commerzbank and take it to their level of efficiency, there’s a tremendous upside in terms of increased profitability,” Octavio Marenzi, CEO of consulting firm Opimas, told CNBC’s “Squawk Box Europe” on Tuesday.
“But [German Chancellor] Olaf Scholz is not an investor. He’s a politician and he’s very concerned about the jobs side of things. And if you look at what UniCredit has done in terms of slimming down things in its Italian operations or particularly in its German operations, it’s been quite impressive,” Marenzi said.
Scholz on Monday criticized UniCredit’s decision to up the ante on Commerzbank, describing the move as an “unfriendly” and “hostile” attack, Reuters reported.
Commerzbank’s Deputy Chair Uwe Tschaege, meanwhile, reportedly voiced opposition to a potential takeover by UniCredit on Tuesday. Speaking outside of the lender’s headquarters in central Frankfurt, Tschaege said the message was simple and clear: “We don’t want this.”
“I feel like vomiting when I hear his promises of cost savings,” Tschaege reportedly added, referring to UniCredit ‘s CEO Andrea Orcel.
Separately, Stefan Wittman, a Commerzbank supervisory board member, told CNBC on Tuesday that as many as two-thirds of the jobs at the bank could disappear if UniCredit successfully carries out a hostile takeover.
The bank has yet to respond to a request for comment on Wittmann’s statement.
Hostile takeover bids are not common in the European banking sector, although Spanish bank BBVA shocked markets in May when it launched an all-share takeover offer for domestic rival Banco Sabadell. The latter Spanish lender rejected the bid.
Opimas’ Marenzi said the German government and trade unions “are basically looking at this and saying this means we could lose a bunch of jobs in the process — and it could be quite substantial job losses.”
“The other thing is there might be a bit of a national embarrassment that the Italians are coming in and showing them how to run their banks,” he added.
A spokesperson for Germany’s government was not immediately available when contacted by CNBC on Tuesday.
Germany’s Scholz has previously pushed for the completion of a European banking union. Designed in the wake of the 2008 global financial crisis, the European Union’s executive arm announced plans to create a banking union to improve the regulation and supervision of lenders across the region.
What’s at stake?
Craig Coben, former global head of equity capital markets at Bank of America, said the German government would need to find “very good” reasons to block UniCredit’s move on Commerzbank, warning that it would also have to be consistent with the principles around European integration.
“I think it is very difficult for UniCredit to take over or to reach an agreement on Commerzbank without the approval of the German government, just as a practical matter — but I think Germany needs to find a legitimate excuse if it wants to intervene [or] if it wants to block the approach from UniCredit,” Coben told CNBC’s “Squawk Box Europe” on Tuesday.
The Commerzbank AG headquarters, in the financial district of Frankfurt, Germany, on Thursday, Sept. 12, 2024.
Emanuele Cremaschi | Getty Images News | Getty Images
“Germany has signed up to the [EU’s] single market, it has signed up to the single currency, it has signed up to [the] banking union and so it would be inconsistent with those principles to block the merger on the grounds of national interest,” he continued.
“And I think that’s really what’s at stake here: what is the meaning of [the] banking union? And what is the meaning of the European project?”
Former European Central Bank chief Mario Draghi said in a report published earlier this month that the European Union needs hundreds of billions of euros in additional investment to meet its key competitiveness targets.
Draghi, who has previously served as Italian prime minister, also cited the “incomplete” banking union in the report as one factor that continues to hinder competitiveness for the region’s banks.
— CNBC’s April Roach contributed to this report.
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Justice Department accuses Visa of debit network monopoly that affects price of ‘nearly everything’
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Justin Sullivan | etty Images
The U.S. Justice Department on Tuesday sued Visa, the world’s biggest payments network, saying it propped up an illegal monopoly over debit payments by imposing “exclusionary” agreements on partners and smothering upstart firms.
Visa’s moves over the years have resulted in American consumers and merchants paying billions of dollars in additional fees, according to the DOJ, which filed a civil antitrust suit in New York for “monopolization” and other unlawful conduct.
“We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market,” Attorney General Merrick Garland said in a DOJ release.
“Merchants and banks pass along those costs to consumers, either by raising prices or reducing quality or service,” Garland said. “As a result, Visa’s unlawful conduct affects not just the price of one thing — but the price of nearly everything.”
Visa and its smaller rival Mastercard have surged over the past two decades, reaching a combined market cap of roughly $1 trillion, as consumers tapped credit and debit cards for store purchases and e-commerce instead of paper money. They are essentially toll collectors, shuffling payments between banks operating for the merchants and for cardholders.
Visa called the DOJ suit “meritless.”
“Anyone who has bought something online, or checked out at a store, knows there is an ever-expanding universe of companies offering new ways to pay for goods and services,” said Visa general counsel Julie Rottenberg.
“Today’s lawsuit ignores the reality that Visa is just one of many competitors in a debit space that is growing, with entrants who are thriving,” Rottenberg said. “We are proud of the payments network we have built, the innovation we advance, and the economic opportunity we enable.”
More than 60% of debit transactions in the U.S. run over Visa rails, helping it charge more than $7 billion annually in processing fees, according to the DOJ complaint.
The payment networks’ decades-old dominance has increasingly attracted attention from regulators and retailers.
Litany of woes
In 2020, the DOJ filed an antitrust suit to block Visa from acquiring fintech company Plaid. The companies initially said they would fight the action, but soon abandoned the $5.3 billion takeover.
In March, Visa and Mastercard agreed to limit their fees and let merchants charge customers for using credit cards, a deal retailers said was worth $30 billion in savings over a half decade. A federal judge later rejected the settlement, saying the networks could afford to pay for a “substantially greater” deal.
In its complaint, the DOJ said Visa threatens merchants and their banks with punitive rates if they route a “meaningful share” of debit transactions to competitors, helping maintain Visa’s network moat. The contracts help insulate three-quarters of Visa’s debit volume from fair competition, the DOJ said.
“Visa wields its dominance, enormous scale, and centrality to the debit ecosystem to impose a web of exclusionary agreements on merchants and banks,” the DOJ said in its release. “These agreements penalize Visa’s customers who route transactions to a different debit network or alternative payment system.”
Furthermore, when faced with threats, Visa “engaged in a deliberate and reinforcing course of conduct to cut off competition and prevent rivals from gaining the scale, share, and data necessary to compete,” the DOJ said.
Paying off competitors
The moves also tamped down innovation, according to the DOJ. Visa pays competitors hundreds of millions of dollars annually “to blunt the risk they develop innovative new technologies that could advance the industry but would otherwise threaten Visa’s monopoly profits,” according to the complaint.
Visa has agreements with tech players including Apple, PayPal and Square, turning them from potential rivals to partners in a way that hurts the public, the DOJ said.
For instance, Visa chose to sign an agreement with a predecessor to the Cash App product to ensure that the company, later rebranded Block, did not create a bigger threat to Visa’s debit rails.
A Visa manager was quoted as saying “we’ve got Square on a short leash and our deal structure was meant to protect against disintermediation,” according to the complaint.
Visa has an agreement with Apple in which the tech giant says it will not directly compete with the payment network “such as creating payment functionality that relies primarily on non-Visa payment processes,” the complaint alleged.
The DOJ asked for the courts to prevent Visa from a range of anticompetitive practices, including fee structures or service bundles that discourage new entrants.
The move comes in the waning months of President Joe Biden‘s administration, in which regulators including the Federal Trade Commission and the Consumer Financial Protection Bureau have sued middlemen for drug prices and pushed back against so-called junk fees.
In February, credit card lender Capital One announced its acquisition of Discover Financial, a $35.3 billion deal predicated in part on Capital One’s ability to bolster Discover’s also-ran payments network, a distant No. 4 behind Visa, Mastercard and American Express.
Capital One said once the deal is closed, it will switch all its debit card volume and a growing share of credit card volume to Discover over time, making it a more viable competitor to Visa and Mastercard.
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UniCredit’s stake in Commerzbank puts Europe’s vision of a banking union in focus: Analyst
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Craig Coben, former global head of equity capital markets at Bank of America, says Europe’s vision of a banking union is what’s at stake when it comes to discussing UniCredit’s stake in Commerzbank.
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ECB’s Centeno on banking consolidation in Europe
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ECB’s Governing Council member Mario Centeno says officials must work through politicians’ comments and focus on their job to finish the banking union.
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