AGs warn Congress that AI threatens the financial system

State attorneys general are pushing Congress to tighten oversight on artificial intelligence in the financial sector. This moves against the current trend of federal banking agencies, which have largely kept 'agentic AI'—systems that can make autonomous decisions—outside their formal guidance. For retailers and operators, this signals a tightening regulatory environment regarding how you use automated tools to approve customers or set financing terms. If your business relies on AI-driven underwriting or automated customer service for financing, you need to pay attention. The AGs are concerned that these systems can introduce bias or lack transparency in lending decisions. When AI handles credit applications, the legal responsibility for 'fair lending' still rests on the merchant and the lender. This push for regulation suggests that 'the black box' excuse won't hold up if an automated system denies credit to protected groups. Expect more scrutiny on the data inputs you use and the disclosures you provide to customers when AI is part of the approval process. The goal is to ensure that automation does not bypass existing consumer protection laws designed to prevent discrimination.

Source: American Banker — Top News

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