President Biden today issued a sweeping executive order directing federal agencies to review and possibly draft new rulemaking on the use of artificial intelligence across multiple sectors of the economy, including financial services. Among other things, the order encourages agencies to use their authority to address financial stability risks posed by AI. It directs the Treasury Department to submit a report within 150 days on best practices for financial institutions to manage cybersecurity risks posed by AI. It also urges the CFPB and federal housing regulators to ensure AI isn’t used to discriminate in appraisals and lending.
The 100-plus page order will require the developers of many AI systems to share their safety test results and other critical information with the U.S. government, set standards and best practices for detecting AI-generated content as a tool for fighting consumer fraud, and establish an “advanced” cybersecurity program to develop AI tools to find and fix vulnerabilities in critical software, according to the White House. It also directs the Federal Communications Commission to review how AI may improve telecom network resiliency and spectrum efficiency, as well as aid the federal government’s fight against unwanted robocalls and robotexts.
The order calls on Congress to pass legislation to protect people’s privacy, including guidance for federal agencies to account for AI risks to privacy. In addition, it directs agencies to establish principles and best practices to mitigate the harms to workers displaced by AI. As for AI in financial services, the order directs CFPB and the Federal Housing Finance Agency to “consider using their authorities” to ensure that AI systems comply with existing federal laws protecting against bias underwriting and appraisals. The CFPB and Department of Housing and Urban Development are also urged, within 180 days, to issue guidance “to combat unlawful discrimination” resulting from AI used in decisions about housing access and other real estate transactions.
The American Bankers Association is collaborating with the Treasury Department on the proposed cybersecurity risk report by convening discussions with financial industry leaders on AI-related cyber risks and risk management practices.
ABA Banking Journal Staff
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