|
Presented by Chime: Delivered daily by 8 a.m., Morning Money examines the latest news in finance politics and policy. | | | | |  | | By Victoria Guida | | | Editor’s note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our s each morning at 5:15 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro.
| | | Artificial intelligence, particularly AI that generates new content and ideas, has surged into view over the past year as one of the most important shifts happening across industries. The technology is growing and evolving rapidly, increasing the urgency for regulators to ensure that the firms they oversee are accounting for risks as they experiment with it. Indeed, last month the Financial Stability Oversight Council named AI as an “emerging risk” to the financial system. But for now, the banking agencies argue that they have the legal authority necessary to keep abuses under control. “We have laws on the books we should use now. And let’s use them,” said Rohit Chopra, director of the Consumer Financial Protection Bureau, in a panel discussion Friday with fellow regulators. “There is no fancy technology exemption to the Equal Credit Opportunity Act, the Fair Credit Reporting Act and others. We don’t really care how you’re marketing your special technology. … If you can’t give those reasons as to why someone has been denied, you can’t use it.” FDIC Chair Martin Gruenberg went further, saying Congress should also be wary about any new legislation it passes to deal with risks from financial firms using AI, given how many laws are already on the books. “If the technology is being utilized in a way that is unfair or deceptive, or discriminatory, or in other ways violates the law, our agencies currently have the authority to act,” he said at the panel, hosted by the National Fair Housing Alliance. “You really want to be cautious about thinking about legislation in this area, without first considering what will be the impact on our existing statutory authorities.” There hasn’t been much congressional activity on that front yet, though Sens. Mark Warner and John Kennedy have put forward a bill that would require FSOC to coordinate a response to market stability threats posed by AI, such as use of deepfakes.
| | | | JOIN 1/31 FOR A TALK ON THE RACE TO SOLVE ALZHEIMER’S: Breakthrough drugs and treatments are giving new hope for slowing neurodegenerative diseases like Alzheimer’s disease and ALS. But if that progress slows, the societal and economic cost to the U.S. could be high. Join POLITICO, alongside lawmakers, official and experts, on Jan. 31 to discuss a path forward for better collaboration among health systems, industry and government. REGISTER HERE. | | | | | The regulators also offered some general advice. Fed Vice Chair for Supervision Michael Barr warned banks: Know what you’re doing: “Can we actually show why a large language model, why a generative AI produced a set of results? And if you can’t explain it, first of all, it doesn’t comply with the law. And second of all, you worry about the kinds of outcomes that you might get.” He also urged financial firms to design AI with a certain set of ethics. “If we let machines do whatever they want, we could get outcomes that are really not humane in a basic sense, not in accord with our basic values,” he said. “So we need to have rules of the road for AI that direct the AI to only do things that are consistent with our values.” Acting Comptroller of the Currency Michael Hsu said the level of scrutiny is higher for AI use cases that are more customer-facing, compared to internal uses like fraud detection. He also noted that the spectrum under AI is pretty broad, and some models have been around longer than others. “To the extent that there’s more familiarity with how a model works and what it’s being used for, there's going to be a greater comfort level of understanding how the controls around that have the accountability [when] that runs,” he said. “With some of the generative AI, I think there are some really hard questions in terms of who's accountable for some of these because it’s designed in a way that doesn’t make it automatically predictable.” HAPPY MONDAY — Zach Warmbrodt is getting some well-deserved rest after a busy week in Davos. In the meantime, send tips and story ideas: vguida@politico.com.
| | A message from Chime: Tired of overdraft fees? Learn how Chime is different.
Chime is expanding banking with no overdraft fees to everyday people. Cost is a barrier to many, which is why Chime never charges overdraft or monthly fees — and there are no minimum balance requirements for our checking and savings accounts. We reach customers traditional banks don't, can't or won't and are helping everyone unlock financial progress. Learn more. | | | | | Monday … The Brookings Institution holds an event on place-based policy featuring NEC Director Lael Brainard at 1 p.m. … Wednesday … The SEC holds a public meeting to vote on SPAC disclosure and liability rules at 10 a.m. … Thursday … SEC Chair Gary Gensler speaks on T+1 settlement at 8 a.m. … GDP data for 2023 released at 8:30 a.m. … The Peterson Institute for International Economics holds an event on the next steps for the Basel Committee on Banking Supervision, featuring Secretary-General Neil Esho at 9 a.m. … Senate Banking Committee holds a hearing on national flood insurance reauthorization at 10 a.m. … Treasury Secretary Janet Yellen gives a speech on the Biden economy in Chicago at 1:35 p.m. … Friday … Latest monthly reading for the personal consumption expenditures index released at 8:30 a.m. …
| | | | YOUR GUIDE TO EMPIRE STATE POLITICS: From the newsroom that doesn’t sleep, POLITICO's New York Playbook is the ultimate guide for power players navigating the intricate landscape of Empire State politics. Stay ahead of the curve with the latest and most important stories from Albany, New York City and around the state, with in-depth, original reporting to stay ahead of policy trends and political developments. Subscribe now to keep up with the daily hustle and bustle of NY politics. | | | | | Morning in Biden’s economy? — Friday’s economic data showed consumer sentiment posting its sharpest two-month increase in decades, while expectations for inflation in the year ahead fell to the lowest level since December 2020. Thursday’s jobless claims reading fell to the lowest in 16 months, and the stock market closed at a record high on Friday. Read more from our Sudeep Reddy on why President Joe Biden is wishing today’s economy could be frozen in place. MM sidebar: The University of Michigan’s consumer sentiment index is now roughly where it stood at this point in Barack Obama’s presidency. The index continued to creep up throughout 2012, and he ultimately won reelection comfortably. Tax deal moves forward — A deal that would expand the Child Tax Credit and revive several breaks for businesses passed out of the House Ways and Means Committee on Friday in a strong bipartisan vote, while also winning an endorsement from the White House, our Benjamin Guggeinheim reports. The package passed the committee 40-3, though its fate on the House floor remains uncertain. Dems offer support for higher bank capital — Senate Banking Chair Sherrod Brown (D-Ohio) is leading a group of colleagues in voicing support for federal regulators' proposal to boost banks' capital requirements to comply with Basel III guidelines, our Eleanor Mueller reports. Bank regulators have indicated they may modify the proposal in response to the pushback. The lawmakers’ letter could help give them political cover to stand firm on raising capital. ‘Politically charged’ investigations of transaction data — Eleanor also reports that Sen. Tim Scott, the top Republican on the Banking Committee, is raising concerns over claims that the Treasury Department and its Financial Crimes Enforcement Network directed banks to parse customers' transactions for “disfavored” political terms to aid law enforcement, such as searching words like “MAGA” and “Trump” to help prosecute people in Jan. 6 cases. Billionaires still pushing for Haley — Wall Street billionaires Stanley Druckenmiller, Henry Kravis, Ken Langone and Cliff Asness are co-hosting a fundraiser for Nikki Haley next week in New York, Bloomberg reports. “The event is part of a fundraising swing scheduled for Haley between the primaries in New Hampshire next Tuesday and in her home state of South Carolina on Feb. 24,” the outlet reported, citing an anonymous donor.
| | | | A message from Chime:   | | | | | First in MM: Adam Hodge to Bully Pulpit — Adam Hodge, who served in top communications roles in the Biden and Obama administrations, is joining public affairs firm Bully Pulpit International as managing director in its Washington office. Hodge was most recently at the White House National Security Council, USTR and Ariel Investments. First in MM: Paulson, Geithner-led group adds new members — The bipartisan Aspen Economic Strategy Group, co-chaired by former Treasury Secretaries Hank Paulson and Tim Geithner is adding five new members: Hoover Institution senior fellow John Cochrane, Centerview Partners co-founder Blair Effron, Willett Advisors CEO and former Obama car czar Steven Rattner, Yale University associate professor of law and former Biden Treasury official Natasha Sarin and Columbia University President Minouche Shafik.
| | A message from Chime: Chime is expanding banking with no overdraft fees to everyday people. Cost is a barrier to many, which is why Chime never charges overdraft or monthly fees — and there are no minimum balance requirements for our checking and savings accounts. We reach customers traditional banks don't, can't or won't and are helping everyone unlock financial progress. Learn more. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |  |
