Gensler Delivers Remarks on AI at National Press Club Event

Securities and Exchange Commission (SEC) Chair Gary Gensler delivered remarks at a National Press Club event covering Artificial Intelligence and its application to the financial markets. In his remarks on AI generally, Gensler observed “I believe it’s the most transformative technology of our time, on par with the internet and mass production of automobiles.” He noted that AI is already being used for natural language processing, radiology, and even by the U.S. Postal Service to predict addresses based on handwriting. In the financial services space, Gensler stated “AI already is being used for call centers, account openings, compliance programs, trading algorithms, sentiment analysis, and more.”

Gensler noted that innovation in this space opens up “tremendous opportunities for humanity,” including benefits in the area of financial inclusion, user experience, and efficiency. He noted that these impacts will be felt at the micro level (individuals) and the macro level (the broader economy and society in general). At the micro level, Gensler argued “Models have been developed to assist in making decisions about who gets jobs, loans, credit, entry to schools, and healthcare…” adding that “[t]he ability of these predictive models to predict doesn’t mean they are always accurate or robust.” In the area of finance, he notes the advice and recommendations given by advisers and brokers “must be in the best interests of the clients and retail customer and not place their interests ahead of investors’ interests.” Gensler also noted concerns with deceptive practices by bad actors employing AI technology and conflicts of interest. At the macro level, Gensler stated generative AI has the capacity to fundamentally change the workplace as well as impact the geopolitical climate. He discussed issues around privacy and intellectual property but also concerns about financial stability, highlighting that “AI may heighten financial fragility as it could promote herding with individual actors making similar decisions because they are getting the same signal from a base model or data aggregator.” Gensler stated the development and use of AI in financial markets will require new macro-prudential policy considerations.

Click here to read Gensler’s full speech at the National Press Club.