The top financial regulator in the United States will formulate new regulatory rules for AI credit business

The top financial regulator in the United States will formulate new regulatory rules for AI credit business

Sina Technology News Beijing time on July 21 morning news, it is reported that the top consumer finance regulator in the United States is increasing its focus on banks’ use of AI technology when making credit decisions, suggesting that financial institutions are about to face new restrictions.

Rohit Chopra, head of the U.S. Consumer Financial Protection Bureau (CFPB), said new regulations could be coming soon. The broad application of CFPB regulations means that all industry players, from banks to internet lenders and mortgage servicers, could be affected.

Rohit Chopra, Director of the U.S. Consumer Financial Protection Bureau (CFPB)Rohit Chopra, Director of the U.S. Consumer Financial Protection Bureau (CFPB)
“Our work on AI is very broad, and we look specifically at whether there is discrimination in the use of data in various aspects of the underwriting process,” Chopra said Wednesday night. One big challenge is generative AI techniques that generate content such as images and text based on user prompts.

The CFPB has taken steps to prevent abuse. The agency has proposed a set of rules governing algorithmic home appraisals. The agency also recently issued a warning that chatbots used by financial firms may be breaking the rules, and has begun communicating with European counterparts on the issue.

But Chopra said regulatory work on biometrics, facial recognition and voice cloning is just beginning. “We’ve already proposed a rule for AI assessments, and there are more rules to come.”

The CFPB’s move dovetails with the Biden administration’s broader efforts in AI. While U.S. government officials see the benefits of AI, they have also increasingly warned of the need for stricter regulation of AI.

On Monday, U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler said AI models or data sets developed by a handful of companies could become a destabilizing factor in the financial industry if they become widely used, creating a collective effect. Wall Street regulators plan to propose new regulations next week to address conflicts of interest related to the use of AI by brokerages or money managers when dealing with clients.

The Federal Reserve’s Michael Barr said on Tuesday that credit institutions need to ensure that AI tools do not bias and discriminate in credit decisions.

343.77 and OpenAI, plan to make industry voluntary commitments as early as this Friday on how to ensure the safety of using 　　AI technology after the US government issued a warning on AI technology .( 343.77 , -3.10 , -0.89% ) ( 120.31 , 0.78 , 0.65% )

Chopra, a longtime advocate for consumer rights protection, said Wednesday that work in this area will not only help solve current AI problems, but also prepare for possible future flashpoints.

The CFPB has served as a lightning rod for American politics since it was created in the aftermath of the 2008 global financial crisis. Democrats see the agency as a necessary check on corporate power and as a guardian of ordinary American consumers. The agency’s popularity among ordinary Americans could rise if the U.S. economy falls into recession. However, it has also come under fire from some Republicans and business groups who say the agency lacks accountability.

In addition to AI technology, Chopra also said that CFPB is preparing to issue new regulatory requirements on how financial institutions share customer data and carry out open banking (open banking). The goal is to make it easier for Americans to share personal financial information held by banks with third parties, including fintech companies.

　Chopra said the CFPB will consider some of the industry’s established standards when drafting the new rules, which will be proposed in October. “Our role is to help implement these standards in multiple ways. But if the standards are hijacked by any company and become too distorted, the whole system will collapse.”