A new bill with bipartisan support would commission studies on the use of artificial intelligence (AI) in the banking and housing sectors, where lawmakers have been sounding an alarm about algorithmic price fixing and commercial misconduct enabled by new technologies.
The AI Act of 2024, backed by the top Democrat and Republican on the House Financial Services Committee, would look at how banks use AI in property valuations, loan underwriting, debt collection, mortgage issuance, and how fair they’re being when it comes to extending credit using AI, among other business activities.
Studies are to be commissioned from the Federal Reserve, the Securities and Exchange Commission, the Housing Department and other federal agencies. The bill will also look at how AI is being used by landlords, property managers and real estate agents.
“Artificial Intelligence is growing rapidly, and people across America are already seeing its use in our nation’s housing and financial services sectors, with impacts on mortgage lending, credit scoring, and more,” Rep. Maxine Waters (D-Calif.), ranking member of the House Financial Services Committee, said in a statement.
The new bill, which is paired with a separate House resolution and comes ahead of an AI hearing in the committee later this week, also looks at how AI is being used internally by banks and how they’re incorporating it into security and data privacy policies.
AI, which has grabbed the public’s attention in recent years for its capacity to convincingly mimic human language, is increasingly being adopted across different commercial sectors.
Some economists have compared its integration to the personal computing revolution of the 1990s, making predictions that range from productivity surges to new waves of job offshoring.
“Artificial intelligence holds the promise to revolutionize our financial system,” Rep. Patrick McHenry (R-N.C.), the retiring chair of the House Financial Services Committee, said in a statement announcing the legislation.
The use of third-party algorithms that take proprietary data to make pricing recommendations has presented issues for lawmakers and courts in industries that range from real estate to frozen potato processing.
In August, the Justice Department and attorneys general in half a dozen states filed an antitrust lawsuit against a software company, alleging it “enabled landlords to collude to raise rents” and accusing the company of “monopolizing the market with its rent-setting software.”
The new legislation follows the first period of elevated inflation in the U.S. in decades, in which Americans’ sensitivity to the cost of living soared.
Prices and the economy were the top issue for voters in the November election, according to many different polls. Vice President Harris campaigned on a promise to end “price gouging” in grocery stores, where many Americans felt price increases most acutely.
Both the Federal Reserve of New York and the Federal Trade Commission (FTC) noted profit margin expansion in the grocery sector following the post-pandemic inflation.