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Jan 11, 2024 | In The News

Bloomberg Law

  • Bipartisan working group will study new products, fraud tools
  • Working group to follow work undertaken in prior Congress

House lawmakers announced a new bipartisan working group to study the impact of artificial intelligence on financial services and housing.

The House Financial Services Committee’s bipartisan Working Group on Artificial Intelligence plans to study how AI will affect the development of new products and services. The working group will also study fraud prevention tools and how AI can improve compliance at financial institutions, as well as the potential effects on workers in the industry.

The working group continues lawmakers and regulators’ focus on the legal, privacy, and other challenges AI poses to industries across the globe. Federal banking regulators have separately requested information from financial institutions about their uses of AI, and warned banks to monitor their AI lending tools for discrimination baked into their models.

“The working group will explore this technology’s potential, specifically its adoption in our financial system. It will also find ways to leverage artificial intelligence to foster a more inclusive financial system, while establishing the U.S. as the world leader in AI development and terms of use,” House Financial Services Committee Chairman Patrick McHenry (R-N.C.) said in a statement.

McHenry is retiring at the end of this congressional session.

The working group plans to follow the efforts of a task force on AI established when Democrats controlled the committee beginning in 2019 and ending in 2023.

Committee ranking member Maxine Waters (D-Calif.) said she was “eager to get together with my colleagues on both sides of the aisle to examine the benefits and dangers of AI to ensure that this technology does not advance beyond our ability to regulate it, worsen existing inequities, and that consumers are properly protected from harm or abuse.”

AI Focus

The working group will also examine directives required by President Joe Biden’s October executive order on the use of AI in financial services.

Read More: Biden’s AI Order Pushes Bank Regulators to Curb Bias: Explained

Rep. French Hill (R-Ark.), the chairman of the Subcommittee on Digital Assets, Financial Technology, and Inclusion, will lead the working group along with the ranking Democrat on the subcommittee, Rep. Stephen Lynch (D-Mass.).

Hill is a top candidate to replace McHenry as chairman of the Financial Services Committee should Republicans retain control of the House in November’s elections.

Joining Hill and Lynch in the working group are Republicans Young Kim (Calif.), Mike Flood (Neb.), Zach Nunn (Iowa), and Erin Houchin (Ind.). Democrats Sylvia Garcia (Texas), Brittany Pettersen (Colo.), Ayanna Pressley (Mass.), and Sean Casten (Ill.) will also serve.

The growth of AI is a key topic within the financial services industry, and the creation of the working group won industry applause.

“AI is revolutionizing the fabric of the business community,” said Scott Talbott, executive vice president of the Electronic Transactions Association.

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