Federal Reserve Vice Chair for Supervision Michael Barr speaks on bank regulation — 1/19/2024

Federal Reserve Vice Chair for Supervision Michael Barr speaks on bank regulation — 1/19/2024

Introduction

  • Last panel of the day at a conference by the National Fair Housing Alliance
  • Panel consists of heads of important regulatory agencies
  • Focuses on the topic of artificial intelligence (AI) and its implications

Governor Michael Bar's Perspective on AI

  • AI has promises and risks
  • The Federal Reserve wants to encourage innovation with clear guidelines
  • Rapid adoption of AI, particularly generative AI and large language models
  • AI could improve productivity and daily lives, but also lead to economic dislocation and discrimination
  • Data quality and rules of the road are important considerations

Acting Controller Michael Sue's Perspective on AI

  • Recognizes a spectrum of AI, from machine learning to generative AI
  • Emphasizes the need for controls and accountability, particularly in the use of generative AI
  • Raises concerns about accountability with generative AI and its impact on consumers

Chairman Martin Gruenberg's Perspective on AI

  • Acknowledges the importance of the conference and the role of the National Fair Housing Alliance in addressing equity and fairness
  • Highlights the potential of AI to expand access to banking and credit, but also acknowledges the complexity and challenges of implementing the technology safely
  • Discusses the need to consider consumer protection and safety and soundness in supervising institutions using AI
  • Stresses the importance of building in protections from the outset, rather than repairing damage after the fact

Director Chopra's Perspective on AI

  • Reflects on the previous ten years and the techno-utopianism surrounding AI
  • Highlights the need for existing laws, regulations, and enforcement to address AI discrimination and uphold consumer protection
  • Discusses the use of AI tools in investigations and supervision at the Consumer Financial Protection Bureau (CFPB)
  • Emphasizes the importance of a balanced approach, considering outcomes and results, and the utilization of laws and regulations

Agencies' Use of AI Tools

  • Agencies are developing their own internal capabilities and expertise in AI
  • Focus on building technical skills within agencies
  • Collaboration and information-sharing among agencies on AI issues and supervision
  • Consideration of outcomes and results in the use of AI tools

Implementing White House AI Initiatives

  • Alignment with the AI Bill of Rights and the executive order on AI
  • Agencies are engaging with the principles and ideas outlined in these initiatives
  • Focus on safety, security, consumer protection, privacy, equity, innovation, and competition
  • No indication of modifications to model risk management guidance

Conclusion

  • Panelists appreciate the opportunity to discuss AI and fair housing issues
  • Acknowledgment of the role of the National Fair Housing Alliance
  • Gratitude for the commitment to fair housing and lending

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