Alex here.

This is Lex Reg Pulse Daily for Saturday, April 25, 2026.

The week closes with two OCC actions that directly affect bank revenue and structured finance operations — and a Fed leadership signal that reshapes the supervisory planning horizon for every institution.

Start with the OCC.

On Friday, the agency issued an interim final rule preempting Illinois's Interchange Fee Prohibition Act, effective immediately.

National banks and federal savings associations are no longer subject to Illinois's restrictions on interchange fees applied to tax and gratuity portions of transactions, nor to the state's payment card data use rules.

A parallel interim final rule clarifies existing authority for national banks to charge non-interest fees set by third parties.

Both carry a comment deadline of May 24.

Card-issuing institutions that constrained Illinois fee practices should assess whether adjustments are warranted — with separate analysis of any UDAAP exposure on changes.

The preemption is notable beyond its immediate effect.

The OCC acted in interim final form, moving quickly and characterizing Illinois's law as destabilizing to national payment systems.

State-level interchange or payment card laws in other jurisdictions now face a clearer and faster federal preemption path.

The same bulletin package — Bulletin 2026-16 — proposes eliminating the five percent credit risk retention requirement for open market collateralized loan obligation managers under 12 CFR 43.9.

The OCC frames the requirement as lacking clear statutory authority.

The same proposed rulemaking removes minority- and women-owned entity references from Part 24 community development investment rules and eliminates duplicative nondiscrimination requirements for federal savings associations under Part 128.

The formal rule is expected to publish Monday in the Federal Register, starting the comment clock.

Banks and affiliates active in CLO issuance or community development lending should begin substantive analysis now.

On Fed leadership: the Department of Justice dropped its criminal investigation of Chair Jerome Powell.

The probe is closed.

The market response was immediate — prediction market odds of Powell departing the Fed board by May 30 moved to 55 percent.

The closure did not stabilize Powell's position; it accelerated the pricing of his successor.

Kevin Warsh's path to the chairmanship has cleared materially.

For bank planning purposes, the operative document is Warsh's Senate Banking Committee testimony.

He explicitly scoped Fed independence to monetary policy — not bank regulation, not supervisory policy, not international finance.

ALCO teams modeling a different rate environment under a Warsh-led Fed should run that analysis alongside a different supervisory tone.

The two are not separable.

The Federal Reserve approved OceanFirst Financial's acquisition of Flushing Financial under Section 7 of the Bank Holding Company Act — a New Jersey holding company combining with a New York-chartered institution.

The approval continues the Fed's measured posture on Northeast regional consolidation.

The 12-to-24-month integration window carries elevated examination risk.

BSA/AML and CRA program consolidation should be the first-order compliance priority for OceanFirst.

Two deadlines require attention before Monday's close.

The interagency capital framework comment deadline is April 28 — Monday.

Institutions that have not submitted comments have one business day.

The OCC GENIUS Act proposed rule comment deadline follows May 1, with a parallel FinCEN/OFAC obligation that requires a separate substantive submission.

One more item for risk and technology teams.

Security researchers have identified an unpatched architectural flaw in Anthropic's Model Context Protocol — the infrastructure underlying many agentic AI deployments.

Anthropic has declined to patch the vulnerability.

For banks running Anthropic-based AI agents, this creates a third-party vendor risk exposure.

Document all Model Context Protocol deployments and record risk acceptance decisions before the next examination cycle.

Regulators have demonstrated consistent focus on third-party AI governance, and unpatched vulnerabilities in deployed infrastructure will generate examination findings.

For the full analysis, check your Lex Reg Pulse daily briefing in your inbox, or catch Lex Reg Pulse Weekly every Sunday.

I'm Alex.

This has been Lex Reg Pulse Daily.

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