Witnesses Testify on AI in Housing and Financial Services

Witnesses testified on the use of AI in housing and financial services before the House Financial Services Committee ("HFS"). The hearing follows from a publication by an HFS AI Working Group, of a report exploring AI adoption in these industries. (See related coverage.)

Among the six witnesses were John Zecca, Executive Vice President at NASDAQ, Ondrej Linda, Senior Director at Zillow and Frederick Reynolds, Deputy General Counsel for Regulatory Legal and Chief Compliance Officer at FIS Global.

• NASDAQ Executive Vice President John Zecca stated that NASDAQ recognizes the challenges and risks that AI poses, and by extension, the need for oversight. Mr. Zecca emphasized that AI offers significant benefits to the trading industry and the broader economy. He recommended (i) regulators utilize existing rules wherever possible; (ii) any new regulations should be "risk-based and proportionate;" (iii) any new rules governing AI should be "flexible and adaptive" so that the industry can continue to innovate and grow; (iv) regulators should seek to harmonize AI regulation to avoid inconsistencies; and (v) transparency and accountability in the regulatory environment.
• Zillow Senior Director Ondrej Linda stated that Zillow follows four principles that guide the use and development of AI technologies and product offerings: fairness–particularly to ensure no discrimination in housing, safety and accountability, transparency and inclusiveness.
• FIS Global Deputy General Counsel and Chief Compliance Officer Frederick Reynolds emphasized that "consistency in the implementation of risk guardrails and rigorous testing is not just a matter of compliance but essential for optimizing business operations worldwide." He highlighted the need for congressional action on customer identification programs and digital identity systems. Mr. Reynolds also warned that regulations that are too broad or too restrictive "can stifle innovation and progress."

On pending bills being considered, HFS Chair Patrick McHenry emphasized the importance of quality data, model risk management and the need for careful legislative measures. Mr. McHenry stressed that while AI offers significant benefits, it must comply with existing consumer protection laws and that regulators must prepare for this new technological frontier.