Bipartisan legislation to focus on AI’s impact on finance and housing

The rise of artificial intelligence in financial services and real estate sectors has prompted bipartisan legislative action to examine its implications and potential risks for consumers.

Legislative Overview: A new bipartisan bill, the AI Act of 2024, aims to investigate how artificial intelligence is being deployed across banking and housing sectors, with particular focus on potential algorithmic misconduct and pricing issues.

• The bill is supported by top leadership from both parties on the House Financial Services Committee
• Multiple federal agencies, including the Federal Reserve and SEC, will be commissioned to conduct studies
• The legislation arrives ahead of an upcoming AI hearing in the committee

Key Areas of Investigation: The studies will examine various aspects of AI implementation in financial services and real estate, focusing on consumer protection and fair business practices.

• Research will cover AI’s role in property valuations, loan underwriting, and mortgage issuance
• Studies will assess how banks incorporate AI into security and data privacy policies
• The bill will examine AI usage by landlords, property managers, and real estate agents

Market Context: Recent developments in AI-driven pricing and business practices have raised concerns about potential anti-competitive behavior and consumer harm.

• The Justice Department recently filed an antitrust lawsuit against a software company for allegedly enabling landlord collusion on rent prices
• The legislation comes amid heightened consumer sensitivity to living costs and inflation
• AI adoption in financial services is being compared to the transformative impact of personal computing in the 1990s

Leadership Perspectives: Key congressional figures have emphasized both the potential and risks of AI in financial services.

• Rep. Maxine Waters highlighted AI’s growing influence on mortgage lending and credit scoring
• Rep. Patrick McHenry acknowledged AI’s potential to transform the financial system
• The bipartisan support suggests growing consensus on the need for AI oversight in financial sectors

Broader Economic Implications: The intersection of AI and financial services occurs against a backdrop of significant economic challenges and consumer concerns.

• Polls indicate that economic issues and prices remain top voter concerns
• The Federal Reserve of New York and FTC have noted profit margin expansion in various sectors post-pandemic
• The government is increasingly focused on addressing perceived price gouging and market manipulation

Looking Ahead: As AI continues to reshape financial services and housing markets, the findings from these studies could lead to new regulatory frameworks and consumer protections, potentially setting precedents for AI governance in other sectors of the economy.