Michael Barr, vice chair for supervision of the board of governors of the Federal Reserve, testifies all the way through a Area Committee on Monetary Services and products listening to on Oversight of Prudential Regulators, on Capitol Hill in Washington, DC, on Might 16, 2023.
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The Federal Reserve’s best banking regulator expressed warning Tuesday in regards to the affect that synthetic intelligence will have on efforts to verify underserved communities have honest get entry to to housing.
Michael S. Barr, the Fed’s vice chair for supervision, stated AI generation has the possible to get credit score to “individuals who differently cannot get entry to it.”
Then again, he famous that it additionally can be utilized for nefarious manner, particularly to exclude positive communities from housing alternatives via a procedure historically known as “redlining.”
“Whilst those applied sciences have huge possible, additionally they lift dangers of violating honest lending regulations and perpetuating the very disparities that they have got the possible to handle,” Barr stated in ready remarks for the Nationwide Truthful Housing Alliance.
For example, he stated AI may also be manipulated to accomplish “virtual redlining,” which may end up in majority-minority communities being denied get entry to to credit score and housing alternatives. “Opposite redlining,” in contrast, occurs when “costlier or differently inferior merchandise” in lending are driven to minority spaces.
Barr stated paintings being executed via the Fed and different regulators at the Group Reinvestment Act might be serious about ensuring underserved communities have equivalent get entry to to credit score.