New legislation aimed at improving the transparency of artificial intelligence-powered products in financial services was introduced on Wednesday.
Rep. Maxine Waters, D-Calif., the top Democrat on the House Financial Services Committee, introduced the Responsible AI Disclosure Act of 2024, which directs several Federal regulators to study the use and origins of AI products used by financial services. This includes identifying sources of data and how it is used, model design and function, and best practices such as model compliance with Federal laws and regulations.
Under the legislation, Federal regulators would be required to issue a report on findings within six months of the act’s passage to the House Committee on Financial Services and the Senate Committee on Banking, Housing, and Urban Affairs. The report would also include regulators’ recommendations on whether additional Federal actions should be taken to regulate the AI models.
“This bill requires relevant banking and market regulators to study and review the current data labeling practices on tools, products, and services that use AI and make recommendations based on these practices to Congress,” a press release stated. “By labeling the origin of data, used to train AI systems, consumers can recognize how AI is being used to make a specific decision, the quality of such data, and how their data may be used in the process.”
Following the study, agencies would be directed to determine whether its regulated entities and vendors would need to provide additional information to the government on how it uses data to train AI models and “the delineation and ratios of synthetic versus genuine data in the training of artificial intelligence models.”
Federal regulators would include the Federal Reserve, Consumer Financial Protection Bureau, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, National Credit Union Administration, and the Securities and Exchange Commission.
The legislation follows Rep. Waters’ track record of working on AI legislation with House Financial Services Committee Chair Patrick McHenry, R-N.C., which resulted in the committee’s bipartisan Working Group on Artificial Intelligence, announced in January.
“This bill follows the years-long work Congresswoman Waters started by creating the first ever Congressional Task Force on AI, to explore AI in our nation’s housing and financial services system,” the release said. “This Task Force held nearly a dozen hearings to examine the benefits and dangers of AI to ensure that this technology does not advance beyond our ability to regulate it, worsen existing inequities, and harm or abuse consumers.”
