Senators Introduce Legislation Targeting AI Financial Market Threats

In December, Senator Mark Warner (D-VA) and Senator John Kennedy (R-LA) introduced the “Financial Artificial Intelligence Risk Reduction Act,” which would require the Financial Stability Oversight Council (FSOC) to coordinate financial regulators’ response to threats to the stability of the markets posed by AI. The bill would also require the FSOC to identify gaps in the current regulatory structure that could hinder effective responses to AI threats and establish recommendations to address those gaps. Additionally, the legislation contains language that would provide for certain damages if an entity’s use of AI is found to violate U.S. securities laws. According to a press release from Senator Warner’s office, “[t]he legislation also makes clear that anyone who uses an AI model is responsible for making sure that everything that model does complies with all securities laws.” The bill also provides the authority to oversee AI service providers to the National Credit Union Administration (NCUA) and the Federal Housing Finance Agency (FHFA). Senators Warner and Kennedy both sit on the U.S. Senate Banking, Housing, and Urban Affairs Committee that has oversight of the financial markets. In this session of Congress, Members have introduced more than 50 AI-related legislative measures. While some of these bills carry bipartisan support, it is unlikely any one comprehensive measure will be signed into law in the coming months.

Click here to read a press release from Senator Warner on the bill’s introduction.
Click here to read the “Financial Artificial Intelligence Risk Reduction Act.”