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Officials with the National Institute of Standards and Technology (NIST) are in the early days of trying to craft and create regulations for artificial intelligence, and credit unions are looking for some kind of clarity in how to deal with AI. According to a letter filed last week, in short, credit union leaders want that help, but with as few regulatory burdens as possible that are tailored to the needs of credit unions.
The NIST asked for comments after President Joe Biden signed an Executive Order in October on the "Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence." In response to the NIST, America's Credit Unions submitted a letter Friday stating that credit unions are already "highly regulated" and "are aware of the potential legal and operational risks associated with AI."
In the letter, America's Credit Unions Senior Counsel for Research and Policy Andrew Morris wrote, "While new standards and guidelines for AI can help achieve regulatory clarity, they should be tailored to avoid excessive burden, competitive imbalance between regulated and unregulated institutions, or the imposition of unreasonable supervisory expectations for credit unions. To avoid misalignment, duplication or conflict with existing standards, NIST should consult with federal banking regulators to determine how any future statements or best practices published in response to the E.O. might be interpreted in the context of existing financial regulatory frameworks."
According to Morris, the generality of certain sections of the Executive Order creates a high likelihood of overlap with existing laws and standards applicable to financial institutions, including the CFPB's unfair, deceptive and abusive acts or practices prohibition.
The letter pointed out that there are already other federal agencies, such as the NCUA and the Financial Institutions Examination Council (FFIEC), which govern banking services and are already considering the consequences of AI use in the financial services sector.
"Credit unions must undertake risk assessments, perform due diligence, and undergo regular examination as part of a rigorous supervisory process," the letter stated. "In this context, credit union use of AI is already subject to significant scrutiny, just like any other new technology. Accordingly, layering conflicting or overly prescriptive AI regulation on top of the myriad rules and guidelines already applicable to credit unions will only serve to chill adoption of a useful technology."
Morris encouraged NIST to consider developing standards to enable financial institutions to better understand actions taken by their regulators, which are the result of "AI-driven decisions or assessments."
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Michael Ogden
Editor-in-Chief at CU Times. To connect, email at [email protected]. As Editor-in-Chief of CU Times since 2016, Michael Ogden has led the editorial team in all aspects of content strategy and execution, including the creation of the publication’s exclusive and proprietary research database of the credit union industry’s economic landscape. Under Michael’s leadership, CU Times has successfully shifted to an all-digital editorial product with new focuses on the payments, fraud, lending and regulatory beats. Most recently, he introduced a data-focused editorial product for subscribers that breaks down credit union issues into hard data, allowing for a deeper and more factual narrative for readers. In 2024, he launched the "Shared Accounts With CU Times" podcast, which offers a fresh, inside-the-newsroom perspective through interviews with leaders from the credit union industry and the regulatory world. He dives into pressing credit union issues, while revealing the personalities working behind-the-scenes to push the credit union world forward. His background includes years as a radio and TV anchor/reporter and a public relations and digital/social media manager, where he covered the food and music industries, as well as cooperatives and credit unions. Over the years, he has launched numerous exclusive video and podcast series, including a successful series of interactive backstage interviews with musicians at music festivals, showcasing his social media and live streaming production skills.
