On August 12, a coalition of 15 Republican State Attorneys General sent a
letter addressed to the Secretary of the Treasury, Janet Yellen, in response to the the Treasury’s Request for Information (RFI) on the uses, opportunities and risks of AI in the financial services industry.
The State AGs emphasized potential benefits of the implementation of AI by financial services firms including improved customer interactions through AI chatbots, expedited credit risk evaluations, enhanced investment management, and improved fraud detection. The AGs urged the Department to avoid heavy-handed regulation that might stifle innovative uses of AI, noting that enforcement should be limited to deceptive acts or practices or direct harms to competition. The AGs also noted that existing consumer protection laws were already well-positioned to address potential harms arising from these technologies.
The letter also admonished against the politicization of AI regulation, suggesting that any regulation implemented by the Treasury must focus solely on risks to financial reliability and consumer protection. The AGs expressed a concern that, in their view, recent Treasury regulations used financial oversight as a guise to advance non-financial goals, such as environmental regulation, racial equity and other ideological agendas. The AGs asserted that such non-financial purposes were improper justification for Treasury regulations and that any AI regulation should be limited to addressing concerns relating to financial stability.
The letter further advised the Treasury to be mindful of the impact of AI regulations on competition, warning against regulations that could stifle innovation and harm the ability of smaller entities to compete. The AGs also advocated for regulations that complement state laws and that do not preempt existing state enforcement mechanisms, emphasizing the role of State AGs in pursuing recent and successful consumer protection actions.
