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Goldman forms investments group; more auditor independence rule changes may come

In a company memo, Goldman Sachs Group Inc. Chairman and CEO David Solomon disclosed that the investment bank is forming a new alternative investments group, called the Alternatives Capital Markets and Strategy Group, to attract more funds from external investors, the Financial Times reports. Additional details about the alternatives platform, which will be led by Chris Kojima and Mike Koester, will be provided at the company's January 2020 investor day, according to the report.

The U.S. Securities and Exchange Commission is expected to propose new rules that would seek to relax regulatory control over external auditing firms and give them more discretion in evaluating conflicts of interest in their ties with the companies they audit, sources told The Wall Street Journal. According to a biannual agenda of rules to be considered by the regulator, the new rules could be considered by April 2020, the report added.

The Federal Housing Finance Agency has invited comments on a proposed amendment to its stress testing rule. The proposed rule would revise the minimum stress test threshold for entities regulated by the FHFA to $250 billion from $10 billion, remove the requirements for Federal Home Loan Banks subject to stress testing, and remove the adverse scenario from the list of required scenarios. The FHFA will accept comments on the proposed amendments until Jan. 15, 2020.

The Credit Union National Association filed a brief with the U.S. Supreme Court in a case challenging the constitutionality of the Consumer Financial Protection Bureau's leadership. CUNA said it agrees with Seila Law, the plaintiff in the case, that the bureau's current single-director structure "cannot withstand constitutional scrutiny because the statutory restriction on the President's ability to remove the Bureau's Director violates the separation of powers." CUNA is calling for the creation of a multimember leadership commission at the CFPB.

The California Department of Business Oversight ordered auto title lender TitleMax of California, Inc. to pay roughly $700,000 in refunds to more than 21,000 customers and pay a $25,000 penalty for allegedly charging them excessive and illegal interest rates and fees. The Georgia-based lender will also stop making new loans in California as of Jan. 1, 2020, as part of the settlement.

YieldStreet Inc., a digital wealth management platform, acquired WealthFlex, a digital platform that helps investors convert traditional individual retirement account, or IRA, investments into self-directed private investments.

Digital lenders that surfaced in the wake of the last decade's financial crisis promised cheaper loans to risky borrowers rejected by banks. However, after seeing higher-than-expected loss rates on loans sold to investors and significant drops in their stock prices, they are now seeking households with higher incomes, above-average credit scores and less debt relative to their wages, according to a Bloomberg News report. LendingClub Corp., a publicly traded online lender, which has lost almost 90% of its value since it went public in 2014, has cut loan approvals by 17% and raised borrowing costs by nearly 1 percentage point, the report noted.

In other parts of the world

Asia-Pacific: South Korea OKs 3rd internet bank; Australia launches Westpac probe

Europe: Big UK banks pass stress test; UBS to revamp unit; UniCredit off-loads bad loans

Middle East & Africa: NCB, Riyad Bank drop merger talks; Groupe BPCE to sell stake in Tunisian bank

Now featured on S&P Global Market Intelligence

US banks reduce reliance on CDs, but rates significantly lag Fed rate cuts: While certificates of deposit continue to become smaller portions of banks' funding bases, the rates on the products have not fallen as quickly as some would have hoped.

By Texas standards, recent MOE biggest bank M&A deal: The pending merger of equals between Texas Capital and Independent Bank is the largest depository M&A deal in the history of Texas, a state that has seen bank M&A activity surge in the second half of 2019.

The day ahead

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

In Asia, the Hang Seng was up 1.22% to 27,843.71, and the Nikkei 225 rose 0.47% to 24,066.12.

In Europe, around midday, the FTSE 100 fell 0.21% to 7,503.42, and the Euronext 100 was down 0.38% to 1,141.94.

On the macro front

The housing starts report, the redbook, the industrial production report and the Labor Department's JOLTS report 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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