The chief banking regulator for the Federal Reserve raised caution on Tuesday on the potential effects of artificial intelligence on efforts to ensure that underprivileged communities have equitable access to housing.
Vice Chair for Supervision at the Fed Michael S. Barr stated that AI technology has the ability to give credit to “people who otherwise can’t access it.”
However, he pointed out that it may also be used for evil purposes, notably to deny some neighborhoods access to housing through a practice known as “redlining.”
Barr stated in prepared remarks for the National Fair Housing Alliance that while these technologies “have enormous potential, they also carry risks of violating fair lending laws and perpetuating the very disparities they have the potential to address.”
He cited “digital redlining,” whereby AI is used to prevent neighborhoods with a majority of minorities from accessing loans and housing prospects. In contrast, “reverse redlining” occurs when lending is directed into minority neighborhoods while using “more expensive or otherwise inferior products.”
According to Barr, efforts to implement the Community Reinvestment Act by the Fed and other regulators would be concentrated on ensuring that underprivileged populations have equal access to credit.
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