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Facebook delays Libra; CU deal called off; House may OK cannabis banking bill

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Facebook delays Libra; CU deal called off; House may OK cannabis banking bill

Facebook Inc. will delay the launch of its Libra cryptocurrency until all regulatory concerns are addressed. David Marcus, head of Facebook's unit Calibra that will manage Libra, informed Rep. Emanuel Cleaver II, D-Mo., of the move in a letter Sept. 24. House Financial Services Committee Chairwoman Maxine Waters, D-Calif., had called for a halt on Libra amid a spike in data privacy breaches.

Raleigh, N.C.-based First-Citizens Bank & Trust Co. agreed to acquire Duluth, Ga.-based Community Financial Holding Co. Inc. for $2.3 million in cash. Community Financial unit Gwinnett Community Bank will become part of First-Citizens Bank upon deal completion, expected to occur in the first quarter of 2020.

Elsewhere, a proposed merger between Moline, Ill.-based Vibrant CU and Westbrook, Maine-based Infinity FCU has been terminated. Infinity FCU President and CEO Elizabeth Hayes informed the credit union's members that the merger talks ended "amicably."

The Federal Reserve should cut its benchmark interest rate by 50 basis points so it could surely cushion the economy against slower growth, Minneapolis Fed President Neel Kashkari told The Washington Post on Sept. 24. Kashkari, who has been among the Fed's most dovish members since he joined in January 2016, said the central bank "needlessly raised interest" in past years and made the economy more vulnerable to outside shocks. Kashkari does not vote this year on the Federal Open Market Committee and will do so in 2020.

Top officials of the U.S. Securities and Exchange Commission are split over whether the regulator needs to develop a uniform framework for corporate America to follow when making environmental, social and governance disclosures. At a House Financial Services Committee hearing Sept. 24. SEC Commissioners Allison Herren Lee and Robert Jackson Jr. have signaled their interest in developing a uniform set of ESG disclosures that companies could follow, while Commissioner Hester Peirce said executives have long been considering ESG issues within their organizations through the "materiality lens."

Freddie Mac has lately been testing an underwriting software from financial technology startup ZestFinance Inc. that looks at data beyond the traditional credit score and purports to evaluate it differently, to potentially make mortgages more available for certain applicants, including first-time homebuyers and minorities, sources told The Wall Street Journal. The Los Angeles-based startup develops artificial intelligence software that reportedly enables financial firms to access thousands of additional data sources and use an infinite number of variables to better gauge the risk that an applicant will not repay a loan.

Sandy Spring Bancorp Inc.'s buying in-market competitor Revere Bank for $460.7 million in a 100% stock deal has revealed that the new accounting standard called the current expected credit loss, or CECL, will have more than "double count" impact on banks' merger deals when it comes to provision for credit losses. Sandy Spring's deal is expected to close in the first quarter of 2020 when the bank would have adopted the standard. In Sandy Spring's case, the bank would have booked a credit discount of about $20 million under current accounting standards. Under CECL, management said, the bank will record credit impacts of $45 million, a 125% increase.

Demand for short-term loans by banks exceeded the supply offered by the Federal Reserve Bank of New York on Sept. 24, The Wall Street Journal reports. To quell short-term lending markets, the Fed offered $30 billion of two-week cash loans but banks offering collateral in the form of Treasury and mortgage securities asked for $62 billion. In a second offering, the Fed got $80.2 billion in demand for $75 billion of shorter-term overnight loans, according to the news outlet.

Removing Fannie Mae and Freddie Mac from government conservatorship will at least help banks keep, if not regain, their share of the $15.4 trillion U.S. residential mortgage lending market, according to an American Banker report.

The Democratic-controlled House is expected to pass today the Secure And Fair Enforcement Banking Act, or SAFE Banking Act of 2019, that would exempt depositories that offer banking services to cannabis-related businesses from a slew of regulatory requirements, MarketWatch reports. House Financial Services Committee Chairwoman Maxine Waters, D-Calif., said she is pleased that the bill is up for a House vote, noting that it will ensure that state-authorized and regulated cannabis businesses are not forced to operate with just cash.

JPMorgan Chase & Co. is committing $25 million to the Financial Health Network's Financial Solutions Lab which will focus on creating fintech tools to help people increase savings, reduce debt and meet their long-term goals.

The U.S. Senate Committee on Banking, Housing, and Urban Affairs will hold a full-committee hearing at 10 a.m. today on "Facilitating Faster Payments in the U.S."

In other parts of the world

Asia-Pacific: Alibaba closes Ant Financial stake purchase; Australia hints at further rate cut

Europe: UK court loss; Santander sees €1.5B charge; HSBC fine junked

Middle East & Africa: Bank of Israel to grant license to 1st new bank in 40 years; Morocco holds rate

Now featured on S&P Global Market Intelligence

New fintech firm is challenging legacy core bank system providers: A new fintech firm, Neocova Corp., is looking to chip away at the dominant market share of core system providers for banks.

Banks should implement real-time payments solutions ahead of Fed's entry: The Federal Reserve's proposed real-time payments system will not be a reality for at least several more years, but banks should not wait to upgrade their payments infrastructure, Ulrike Guigui, managing director of Deloitte's payments practice, said at the PayThink 2019 conference in Los Angeles.

Midwest bankers keeping 'a close eye' on manufacturing woes: Banks that operate in America's manufacturing heartland may start to feel the squeeze as tariffs and the United Automobile Workers' strike against General Motors drag on.

The day ahead

Early morning futures indicators pointed to a lower opening for the U.S. market.

In Asia, the Hang Seng declined 1.28% to 25,945.35, and the Nikkei 225 was down 0.36% to 22,020.15.

In Europe, around midday, the FTSE 100 fell 0.86% to 7,227.91, and the Euronext 100 slid 1.32% to 1,074.14.

On the macro front

The new home sales report, the State Street Investor Confidence Index, the U.S. Energy Information Administration Petroleum Status Report and the U.S. survey of business uncertainty are due out today.

Click here to read about today's financial markets, setting out the factors driving stocks, bonds and currencies around the world ahead of the New York open.

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