The Federal Reserve just dropped a Regulation O overhaul proposal, and if you've watched insider lending blow up at regional banks, you know exactly why this matters right now.

The Federal Reserve just dropped a Regulation O overhaul proposal, and if you've watched insider lending blow up at regional banks, you know exactly why this matters right now.

The Fed wants to modernize Regulation O — the rule that governs how much credit a bank can extend to its own executives, board members, and major shareholders. These are the people who can lean on the lending desk for their own benefit. The proposal is targeting the gap between who the rule currently covers and who actually has influence over a bank's books — because those two lists stopped matching a long time ago.

Here's what I watch when insider lending gets messy: footnotes on related-party transactions. Restatements. And whether enforcement actions follow comment periods — or precede them. Because sometimes the rulemaking is the tell. It means examiners already found something in the data and they're moving to close it before the next wave of failures makes the evening news.

Separately, Federal Home Loan Bank of Boston filed its 10-Q today. FHLB advances are the liquidity backstop for stressed member banks — so that filing goes straight into my queue. In a tightening regulatory environment, what's flowing through the FHLB system tells you where the real pressure is sitting before it shows up anywhere else.

Real question: does this comment process produce rules with actual teeth, or does it produce a 400-page document that collects dust until the next Heritage State Bank blows up? Because the Fed also just issued an enforcement action against the former chief lending officer of Heritage State Bank — and I'd like to think that's not a coincidence.

The numbers are the numbers. Management can spin. We don't.