CFTC Commissioner Goldsmith Romero Calls for More Authority to Address AI
Commentary by Steven Lofchie
CFTC Commissioner Christy Goldsmith Romero asked members of the Technology Advisory Committee ("TAC") to consider "guardrails to ensure that AI innovation is responsible."
In remarks on "responsible artificial intelligence," the TAC sponsor said that generative AI could become a significant tool to solve "big problems" in cybersecurity, fraud detection, health care and climate change, but that consideration must be given to "protect against someone blindly deploying a tool or model with an outcome that causes harm."
Commissioner Goldsmith Romero instructed the TAC to consider: (i) governance requirements and accountability related to AI use (i.e. how to promote transparency and ensure that humans can detect harmful situations;) (ii) recommending the establishment of "best standards" such as the National Insititute of Standards and Technology ("NIST") "AI Risk Management Framework" for regulated entities; and (iii) closing gaps in existing law on the authority of the CFTC to ensure accountability.
Commentary
Regulators tend to say nice things about the potential benefits of innovation. The follow up is a "but" where the regulator sets a standard that is either completely ambiguous or impossible. In the case of generative AI, the standard recommended is that humans must "be able to detect possible negative outcomes in deployed AI models or systems. . . ."
That sounds reasonable. The problem is that AI works in ways that people do not fully understand and cannot fully anticipate. In effect, the regulator is calling for a standard that cannot be met. That said, creating such a standard does have the benefit of protecting the regulator (who cannot be blamed if something goes wrong or because the regulator would adopt a rule to give it more authority to prohibit things going wrong). Another approach might be to start by accepting the reality that development and use of innovative products necessarily entails accepting some degree of uncertainty. See also "OCC Regulator Describes Challenges Ahead for Office Of Financial Technology."