The Consumer Financial Protection Bureau wants to spur innovation in the use of artificial intelligence and machine learning in financial services, CFPB Director Kathleen Kraninger said today. Highlighting the bureau’s innovation programs—its compliance sandbox, trial disclosure program and revised no-action letter policy—Kraninger said that “the bureau is helping companies to spur innovation while being aware of possible risk.”
Specifically, she said in remarks at the Clearing House/Bank Policy Institute annual conference, “uncertainty about how AI fits into these different regulatory frameworks may be hindering adoption of this technology, especially for credit underwriting.” This uncertainty is particularly acute with respect to the Equal Credit Opportunity Act, which requires explanations in adverse action notices, she explained. “We expect more methods will emerge” to explain AI conclusions and results and outputs, Kraninger said.
Kraninger also said that the bureau is identifying ways to improve the process of requesting consent orders be lifted before their termination date and “ensuring consent orders remain in effect only as long as needed to achieve the desired effects.” She added that she is reviewing a petition from ABA and BPI for regulators to codify that guidance is guidance. “I understand and agree with many of the concerns raised by the petition,” she explained. “There will be a formal and public response in the future.”