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The CLARITY Act just got even worse. Wall Street and its allies have buried an AI immunity scheme inside the sprawling and dangerous crypto bill, hoping Congress will approve it before the public realizes what happened. The new language would establish so-called “AI Innovation Labs” where regulated financial companies could apply to waive or modify the laws and regulations that apply to them. Lawmakers slipped this scheme into a crypto bill, and if enacted it would have far-reaching consequences. Banks, lenders, debt collectors, mortgage companies, credit bureaus, and other financial firms could seek regulatory exemptions for products and services that make “substantial use” of AI. That could mean AI systems making decisions about who gets a mortgage, what interest rate they pay, whether their bank account is frozen, how aggressively a debt is collected, or what financial information they receive from a chatbot. These systems already risk reproducing and accelerating discrimination against Black, Latin, Asian, and Indigenous communities, women, and people with disabilities. The claim that this regulatory immunity shield is necessary for financial services providers to keep up with innovation rings hollow. The financial industry already uses AI while still complying with existing laws. Wall Street does not need immunity to innovate. It wants immunity to maximize profits without being held fully accountable when its algorithms discriminate, deceive consumers, manipulate markets, or inflict financial harm.
This dangerous provision threatens investors and the entire financial system. Unregulated AI-powered trading could facilitate market manipulation. AI cyberattacks could expose customers’ money, personal information, and bank stability. Flawed automated risk models could conceal threats inside major financial institutions until the damage spreads through the economy. The safeguards are frighteningly weak. The AI provisions would require regulators to approve applications meeting a low “more likely than not” threshold. Worse, an application could automatically take effect if an agency fails to issue a decision by the end of the bill’s review period. Wall Street could benefit from regulatory delay while people bear the consequences. Nearly 80 civil rights, labor, consumer, community, and technology-accountability organizations are sounding the alarm. This language would let financial companies use people as unwilling test subjects, reap the profits when an AI experiment succeeds, and leave customers, communities, investors, and the economy carrying the damage when it fails. Congress must oppose this language and every bill containing it, including the CLARITY Act. Lawmakers must reject immunity for unlawful practices and outcomes that could substantially harm people, communities, and the economy. Tell your Senators to block Wall Street’s AI immunity scheme and filibuster the CLARITY Act now. Let’s stop Wall Street from turning people into test subjects. -Patrick Patrick Woodall (he/him)
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