Michael Barr, vice chair for guidance of the board of guvs of the Federal Reserve, affirms throughout a Home Committee on Financial Solutions hearing on Oversight of Prudential Regulators, on Capitol Hill in Washington, DC, on Might 16, 2023.
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The Federal Reserve’s leading banking regulator revealed care Tuesday about the effect that expert system can have on efforts to ensure underserved neighborhoods have reasonable access to real estate.
Michael S. Barr, the Fed’s vice chair for guidance, stated AI innovation has the prospective to get credit to “individuals who otherwise can’t access it.”
Nevertheless, he kept in mind that it likewise can be utilized for dubious ways, particularly to omit specific neighborhoods from real estate chances through a procedure generally called “redlining.”
” While these innovations have huge capacity, they likewise bring dangers of breaching reasonable loaning laws and perpetuating the extremely variations that they have the prospective to attend to,” Barr stated in ready remarks for the National Fair Real Estate Alliance.
As an example, he stated AI can be controlled to carry out “digital redlining,” which can lead to majority-minority neighborhoods being rejected access to credit and real estate chances. “Reverse redlining,” by contrast, takes place when “more costly or otherwise inferior items” in loaning are pressed to minority locations.
Barr stated work being done by the Fed and other regulators on the Neighborhood Reinvestment Act will be concentrated on making certain underserved neighborhoods have equivalent access to credit.