Alex here.

This is Lex Reg Pulse Daily for Saturday, May 16, 2026.

The Federal Reserve enters this weekend without a confirmed chair.

Jerome Powell's term concluded Friday.

He now serves as chair pro tempore until Kevin Warsh is sworn in — expected early this coming week.

Two sitting Fed governors publicly objected to Powell's temporary designation.

Both are Trump nominees.

That dissent has no modern precedent, and it maps the internal fault lines Warsh inherits before he delivers a single public word on rates.

The bond market has already made its own judgment.

The 10-year Treasury yield closed Friday at 4.55% — its highest level since May 2025.

Rate futures now price a hike as the base case.

Cut odds before July 2027 are near one percent.

For asset-liability management teams, that is not a background condition.

It is a planning trigger.

Stress frameworks built only around hold-or-cut rate paths carry unaddressed exposure that becomes visible quickly once Warsh establishes his posture.

On the regulatory side, three formal actions from Friday require direct attention.

The OCC finalized its escrow rule, effective May 15.

The rule codifies existing authority for national banks and federal savings associations to establish and manage real estate lending escrow accounts.

It confirms broad bank discretion over terms, fee structures, investment of escrowed funds, and whether to pay interest to customers.

This is clarifying authority, not a new mandate.

The practical effect is competitive flexibility on escrow account profitability, within the understood constraints of fair lending, UDAAP, and the Community Reinvestment Act.

Compliance teams should audit current escrow practices against the codified standard.

The more operationally urgent action came from New York.

The New York Department of Financial Services issued an Industry Letter explicitly requiring regulated institutions to continue applying disparate impact analysis in lending decisions.

That directly contradicts the Trump administration's executive order and the Consumer Financial Protection Bureau's revised Regulation B, which removed disparate impact from federal fair lending obligations.

The federal framework no longer requires it.

New York affirmatively requires it.

For institutions with material New York consumer lending activity, a single unified fair lending policy cannot satisfy both standards simultaneously.

The first practical step is confirming whether current compliance documentation distinguishes federal and state obligations or treats them as unified.

The Federal Reserve also terminated its Cease and Desist Order against UBS Group AG, Credit Suisse AG, Credit Suisse Holdings USA, and Credit Suisse AG New York Branch, effective May 12.

The original order dated to July 2023 — roughly three years from issuance to termination.

For institutions currently operating under Federal Reserve Cease and Desist orders, that timeline is a practical remediation benchmark.

Two additional approvals are worth flagging for M&A and charter teams.

The Fed approved a trust entity — the Stephen M.

Calk 2025 Trust of Houston — to become a savings and loan holding company through acquisition of National Bancorp Holdings and The Federal Savings Bank in Chicago.

Trust structures approved as savings and loan holding company applicants are relatively uncommon; M&A teams structuring similar transactions should review the order's conditions for precedent language.

Separately, the Fed did not object to United Texas Bank in Dallas converting from a state member bank under Federal Reserve supervision to a national bank under OCC supervision.

Charter conversion as a supervisory resolution mechanism is infrequent; its use here is worth noting.

On the legislative front, the CLARITY Act — the Senate stablecoin bill — cleared the Banking Committee with bipartisan support, including two Democratic votes conditioned on ethics and illicit finance language.

The yield restriction question — whether non-bank stablecoin issuers can offer yield-bearing instruments that bank deposit products legally cannot match — was deferred to floor negotiations.

That question defines the competitive architecture between bank-chartered and non-bank stablecoin issuers, and it will be the central floor amendment fight when the bill advances.

Looking ahead: the FDIC's May 2026 enforcement actions are expected Thursday, May 22.

Watch for consent orders reflecting Chairman Hill's stated examination priorities — capital adequacy, credit quality, and liquidity risk.

And Warsh's first press conference, whenever it comes, is the rate signal ALM teams are waiting to price.

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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