(MENAFN- The Peninsula) Bloomberg
The top US bank regulator says that lenders need to ensure that artificial intelligence tools don't perpetuate biases and discrimination in credit decisions.
Federal Reserve Vice Chair for Supervision Michael Barr said that the central bank is working on its supervisory efforts around AI. He added that if used safely, the technology could have a positive impact on access to loans.
AI could leverage data "at scale and at low cost to expand credit to people who otherwise can't access it,” Barr said Tuesday in prepared remarks for the National Fair Housing Alliance conference in Washington.
"While these technologies have enormous potential, they also carry risks of violating fair lending laws and perpetuating the very disparities that they have the potential to address.”
Barr said machine learning and other artificial intelligence could amplify bias or errors in data or might make incorrect predictions. "There are also risks that the data points used could be correlated with a protected class and lack a sufficient nexus to creditworthiness,” he said.
Gary Gensler, head of the Securities and Exchange Commission, sounded warnings about the use of AI in finance earlier this week.
He said Monday that companies need to be aware of how their use of AI may not be in line with securities rules. The proliferation of AI means governments will probably have to overhaul regulations to maintain global financial stability, Gensler said.
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