Al Drago/Bloomberg
WASHINGTON — The House Financial Services Committee’s task force on artificial intelligence has questioned federal bank regulators, nonbank financial institutions and mortgage lenders about their use of AI and the extent to which Congress should consider legislation on the topic, according to a report released by the committee on Thursday.
The report is the first public effort by the bipartisan task force.
Some government agencies said federal legislation isn’t needed to address concerns about AI, while others said it would help.
“Some government agencies suggested that legislative gaps could arise as AI becomes more widely adopted and sophisticated,” the lawmakers said in the report.
The report provided few details about the type of legislation the committee could consider, but said the House Financial Services Committee should “examine the potential benefits of having a chief AI officer at each financial regulator.”
The panelists, who included a wide range of regulators and market participants, said the use of AI does not exempt banks, mortgage lenders and other financial institutions from obligations such as non-discrimination in lending.
“Regulators should use their supervisory and enforcement powers to ensure that these obligations are met and consider alternative compliance processes where necessary,” the lawmakers said. “Parliament and regulators should seek to identify any legislative or regulatory gaps or limitations in light of the application of AI in the financial services and housing industries.”
During a roundtable with regulators including the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the Federal Reserve, some lawmakers expressed concern about a “lack of definitional clarity” of what the use of AI in financial services actually means.
In particular, the Fed highlighted the potential impact on financial stability of generative AI, a type of machine learning that uses large-scale language models to create text, video, images and other AI tools.
Specifically, the Fed was concerned about “monopoly,” where multiple financial institutions use the same third-party providers, according to the report.
“One panelist warned that widespread adoption of certain AI models could encourage herd behavior in capital markets,” the lawmakers said in the report. “Firms reported trying to mitigate this risk by subjecting models to rigorous testing before deployment and proactively reviewing model outputs for bias or imbalance.”
Some panelists noted that many small financial institutions, including banks,
“While some firms are using third parties to implement AI in their operations, other banks, such as single-branch regional banks, do not have the financial, technological or human resources to do so,” the report said.
