United States lawmakers in the House of Representatives have introduced a bipartisan bill requiring federal regulators to study how artificial intelligence (AI) impacts the financial services and housing industries.
The bill, to be known as either the “Analysis and Improvement Act of 2024” or the “AI Act of 2024,” was co-sponsored by Representatives of the House Financial Services Committee ranking member Maxine Waters (D-CA) and Chair Patrick McHenry (R-NC). It would direct federal financial regulators to study the present and potential benefits and risks of AI in the two sectors.
Waters and McHenry have been frequent sparring partners when it comes to oversight and regulation of the digital asset space, particularly with regard to the role of the Securities and Exchange Commission (SEC), but have also demonstrated a willingness to put differences aside and compromise in order to get legislation passed.
As well as the AI Act, the pair co-sponsored a resolution acknowledging the increasing use of AI in the finance and housing markets, and stating that the technology has “the potential to provide significant opportunities as well as risks across the financial services and housing industries.”
Under the AI Act of 2024, introduced on December 2, key regulators, including the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC), would have to produce a report on the potential risks and benefits of AI, how banking institutions use AI, and how they implement AI to detect and deter money laundering, cybercrime, and fraud.
The report, which the named institutions would have 180 days to produce, must also include recommendations that facilitate the responsible adoption of AI within the financial services industry.
“Artificial intelligence holds the promise to revolutionize our financial system,” said McHenry. “As firms increasingly leverage AI, lawmakers and regulators tasked with oversight of the financial services industry must constantly evaluate the risks and benefits this technology poses.”
He added that “these bills are a small, but critical, step forward to empower the financial system to realize the numerous benefits artificial intelligence can offer for consumers, firms, and regulators.”
This sentiment was echoed by Waters, who noted: “Artificial Intelligence is growing rapidly, and people across America are already seeing its use in our nation’s housing and financial services sectors, with impacts on mortgage lending, credit scoring, and more.”
Waters also promised that the House Financial Services Committee would “continue to collaborate closely with the federal government to identify the risks and benefits of AI and to explore further legislation needed to protect people and our communities.”
There has been an increasing focus on AI regulation, oversight, and implementation in the latter half of this year, and the two bipartisan measures build on the House Committee’s Bipartisan AI Working Group, which was established on January 11 with the mandate of exploring how AI is impacting the financial services and housing industries, including the development of new products and services, fraud prevention, compliance efficiency, and the enhancement of supervisory and regulatory tools.
The group is led by Digital Assets, Financial Technology and Inclusion Subcommittee Chairman French Hill (R-AR) and Subcommittee Ranking Member Stephen F. Lynch (D-MA).
The working group was created in the wake of President Joe Biden’s October 30 executive order to establish a “safe, secure, and trustworthy development and use of artificial intelligence” as part of a broader comprehensive strategy for “responsible innovation.”
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