House Bill Would Require Regulators to Report on AI in Financial Services
House Financial Services Committee Chair Patrick McHenry and Ranking Member Maxine Waters introduced a bill that would direct federal regulators to conduct public studies on the "realized and potential benefits and risks of AI" in the financial services and housing industries.
Under the "Analysis and Improvement Act of 2024" (aka the "AI Act of 2024"), regulators must submit public reports to the House Financial Services Committee and the Senate Banking Committee. The reports would require that:
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Banking Regulators (the FRB, the FDIC, the OCC, the CFPB and the NCUA) examine: (i) the use of AI for customer service, loan underwriting, home valuation, fraud detection and debt collection; (ii) internal processes and compliance procedures, including Federal fair lending laws; (iii) AI adoption by smaller banking institutions (e.g., community banks, credit unions); (iv) mitigation of bias and increasing access for underserved and underbanked consumers; (v) enhancement of cybersecurity risk management; (vi) improvement of competitiveness among institutions of all sizes; and (vii) use of AI by nonbank financial technology firms.
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The SEC examine: (i) market research (public vs. private markets); (ii) portfolio management; and (iii) market surveillance, fraud detection and order placements.
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Housing and Mortgage Regulators (HUD, the Agriculture Department - Rural Housing Service, the Federal Housing Finance Agency and the CFPB) examine: (i) efficiencies in mortgage evaluation, comparison and acquisition; (ii) enhancement of credit decisions for underserved communities; (iii) risk management and compliance with fair lending laws; and (iv) AI use by real estate agents, landlords, mortgage servicers and online platforms.
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Treasury examine: (i) the use of AI by financial institutions to meet the institutions' obligations under the Bank Secrecy Act and sanctions laws; and (ii) the use of AI by financial institutions to protect against cybersecurity threats and to respond to cybersecurity attacks.
The bill would also require regulators to include in each report: (i) statutes, regulations and guidance impacting AI development and use; (ii) current use cases of AI and other areas where AI applications would be "uniquely suited" but are not currently being deployed; (iii) challenges in leveraging AI, hiring and retaining skilled staff and potential solutions; and (iv) recommendations for responsible AI adoption.
An accompanying resolution sets out the House Financial Services Committee's role in overseeing AI in the financial services and housing industries. The resolution expresses the intent of Congress to ensure (i) regulators apply and enforce existing laws; (ii) regulators have tools to oversee new products and services; (iii) consideration on data privacy; (iv) understanding of AI's impact on the workforce; and (v) US global leadership on AI development.