{"id":2070104,"date":"2023-10-17T11:38:05","date_gmt":"2023-10-17T15:38:05","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/sec-boss-says-ai-triggered-financial-crisis-nearly-unavoidable-without-regulation\/"},"modified":"2023-10-17T11:43:30","modified_gmt":"2023-10-17T15:43:30","slug":"sec-boss-says-ai-triggered-financial-crisis-nearly-unavoidable-without-regulation","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/sec-boss-says-ai-triggered-financial-crisis-nearly-unavoidable-without-regulation\/","title":{"rendered":"SEC Chief Warns of Inevitable AI-Driven Financial Crisis sans Regulation."},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"float:left\"><div class=\"counts mashsbcount\">20<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fsec-boss-says-ai-triggered-financial-crisis-nearly-unavoidable-without-regulation%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=2070104&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><blockquote>\n<h2>SEC Chair Warns of Impending Financial Crisis Caused by\u200b AI<\/h2>\n<p>According to Gary Gensler, the Chair of \u200cthe United States Securities \u200dand Exchange Commission (SEC), a financial crisis fueled by the widespread use of \u2062artificial intelligence\u200d (AI) is &#8220;nearly unavoidable&#8221; unless\u2062 regulators \u200btake \u200dswift action.<\/p>\n<p>In an interview with the Financial\u200c Times, Gensler emphasized the urgent need for regulators to address the risks posed \u2062by\u2064 the concentration of power in AI platforms, which could <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/european-central-bank-eus-gas-price-cap-scheme-could-backfire-raise-volatility\/\" title=\"European Central Bank: EU\u2019s Gas Price Cap Scheme Could Backfire, Raise Volatility\">jeopardize financial stability<\/a>.<\/p>\n<div class=\"my-5\">While Wall \u2062Street Banks have been <a href=\"https:\/\/www.theepochtimes.com\/article\/stock-market-today-wall-streets-ai-frenzy-and-strong-bank-profits-send-stocks-higher-5407153\" target=\"_blank\" rel=\"noopener\">experimenting\u200d with AI<\/a> for fraud detection and market surveillance, they have recently expanded its use to include account opening processes and brokerage apps.<\/div>\n<div class=\"shortcode\">\n<div class=\"border-comp-divider mb-4 mr-4 w-full max-w-[500px] border px-5 py-4 text-[16px] leading-[20px] text-[#262626] md:float-left\" id=\"in_article_related_stories\">\n<h2 class=\"mb-3 font-sans text-[16px] font-semibold uppercase leading-[19px] text-[#2F2F2F]\">Related Stories<\/h2>\n<div class=\"mb-4 flex gap-2\">\n<div class=\"grow\">\n<div class=\"mb-1 line-clamp-2\">\n            <a href=\"http:\/\/www.theepochtimes.com\/article\/sec-seeks-court-order-to-compel-elon-musks-testimony-in-twitter-probe-5505138?ea_src=author_manual&#038;ea_med=related_stories\"><\/p>\n<h3>SEC Seeks Court Order to Compel\u200c Elon Musk&#8217;s Testimony in Twitter Probe<\/h3>\n<p>            <\/a>\n          <\/div>\n<div class=\"text-comp-caption text-[14px] leading-[18px]\">10\/6\/2023<\/div>\n<\/p><\/div>\n<div class=\"shrink-0 basis-[120px]\">\n          <a href=\"http:\/\/www.theepochtimes.com\/article\/sec-seeks-court-order-to-compel-elon-musks-testimony-in-twitter-probe-5505138?ea_src=author_manual&#038;ea_med=related_stories\"><\/a>\n        <\/div>\n<\/p><\/div>\n<div class=\"mb-4 flex gap-2\">\n<div class=\"grow\">\n<div class=\"mb-1 line-clamp-2\">\n            <a href=\"http:\/\/www.theepochtimes.com\/epochtv\/sec-chair-gary-gensler-testifies-to-house-financial-services-committee-oversight-hearing-5498291?ea_src=author_manual&#038;ea_med=related_stories\"><\/p>\n<h3>SEC Chair Gary Gensler Testifies to \u2064House Financial \u2064Services\u2064 Committee Oversight Hearing<\/h3>\n<p>            <\/a>\n          <\/div>\n<div class=\"text-comp-caption text-[14px] leading-[18px]\">9\/27\/2023<\/div>\n<\/p><\/div>\n<div class=\"shrink-0 basis-[120px]\">\n          <a href=\"http:\/\/www.theepochtimes.com\/epochtv\/sec-chair-gary-gensler-testifies-to-house-financial-services-committee-oversight-hearing-5498291?ea_src=author_manual&#038;ea_med=related_stories\"><\/a>\n        <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<div class=\"my-5\">Gensler expressed concern that if multiple institutions rely on the same data models, it could lead to herd mentality and destabilize financial markets, potentially \u200btriggering a recession.<\/div>\n<p>&#8220;In the future, we will likely experience a financial crisis, and people will realize that we relied too heavily on a single data aggregator or model,&#8221; Gensler warned.<\/p>\n<p>He further\u200c added, &#8220;Perhaps it will occur in the\u2064 mortgage market or some sector of the equity market.&#8221;<\/p>\n<div class=\"shortcode post-related-videos\">\n<div class=\"lazyload-wrapper\">\n<div class=\"lazyload-placeholder\"><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p>Gensler \u2062predicts that an AI-triggered\u200b financial crisis could occur as early as the late 2020s or early \u200c2030s. The previous major crisis was the global financial\u200c crisis \u200d(GFC) from mid-2007 to early \u200b2009, which <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/sec-boss-says-ai-triggered-financial-crisis-nearly-unavoidable-without-regulation\/\" title=\"SEC Chief Warns of Inevitable AI-Driven Financial Crisis sans Regulation.\">caused \u2063severe economic turmoil comparable<\/a> to\u2062 the Great Depression \u2062of 1929.<\/p>\n<div class=\"post-figure\">\n<figure style=\"width:600px\" class=\"alignnone\"><figcaption>People wait in the \u200dfood line\u200d at\u2063 the Yonge Street Mission in Toronto during the\u2064 Great \u2062Depression in\u200c the 1930s.\u2062 (Public Domain)<\/figcaption><\/figure>\n<\/p><\/div>\n<div class=\"my-5\">Experts attribute the GFC to a\u2064 combination of factors, including the downturn in \u200cthe American housing market, reckless risk-taking by investors and \u200bfinancial\u2062 institutions, and regulatory and policy errors. The crisis spread globally through interconnectedness in the financial system.<\/div>\n<h2>Challenges in Regulating AI<\/h2>\n<div class=\"my-5\">While Gensler acknowledges\u200c the \u200dneed for increased regulation around AI, he\u2062 recognizes the difficulty in shaping effective regulations.<\/div>\n<p>&#8220;Addressing AI&#8217;s impact on financial stability is\u200d challenging because our\u200b current \u200bregulations focus on individual institutions, banks, money market funds, \u2064and brokers. It&#8217;s not designed for the horizontal\u2063 nature of \u200bAI, where multiple institutions rely on the same\u2064 underlying models and data aggregators,&#8221; explained Gensler.<\/p>\n<div class=\"my-5\">The SEC has already proposed &#8220;conflict\u200c of interest&#8221; rules \u2062to prevent investment firms \u2063from prioritizing their\u200c interests over investors when using predictive data analytics (PDA) or similar AI technologies. However, the proposal has faced criticism for potentially\u200d hindering innovation and \u2063AI adoption.<\/div>\n<div class=\"my-5\">Gensler\u2064 is not the only regulator\u2063 expressing concerns about the <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/warner-presses-ai-developers-over-chatbots-promoting-eating-disorders\/\" title=\"Warner urges AI developers to address chatbots promoting eating disorders.\">potential harm\u2064 caused<\/a>\u200d by AI. The Federal Trade Commission has initiated a review of\u200d Open AI, the\u2062 creators of ChatGPT, due \u200cto worries about consumer harm and \u2064data security.<\/div>\n<div class=\"my-5\">In September, Senate Majority Leader Chuck Schumer hosted closed-door listening\u200b sessions with tech \u200cleaders, \u200dincluding Elon Musk and Satya Nadella, \u2062to discuss AI regulation. However, critics argue that these discussions \u200dhave yielded little progress in developing effective\u200d legislation.<\/div>\n<div class=\"my-5\">While the challenges of regulating\u200d AI persist, it is crucial to address\u2062 the risks associated with its widespread use to prevent a future\u2063 financial crisis.<\/div>\n<div class=\"post-figure\">\n<figure style=\"width:600px\" class=\"alignnone\"><figcaption>Senate\u200b Majority Leader Chuck Schumer (D-N.Y.) in \u200bWashington on Dec. 22, \u20622022. (Anna Moneymaker\/Getty \u200cImages)<\/figcaption><\/figure>\n<\/p><\/div>\n<div class=\"my-5\">\n<h2><b>Lack of Progress in\u200c AI Regulation Forum<\/b><\/h2>\n<div class=\"my-5\">Attendees of the September\u2062 AI forum hosted by \u200bSenator \u200cSchumer expressed disappointment with the lack\u200d of \u200dsubstantial progress in developing \u200dregulations.\u2064 Limited \u2063time for meaningful \u200ddiscussion and questions\u200d left many feeling that the forum was merely a show without real advancements.<\/div>\n<p>&#8220;In terms of regulatory\u200c suggestions, I \u200cdidn&#8217;t hear much,&#8221; said\u200d Senator\u200d John Kennedy. Senator Josh Hawley also questioned Schumer&#8217;s commitment to finding solutions, comparing it \u200dto the lack \u2062of action on\u200b antitrust issues in recent years.<\/p>\n<\/p><\/div>\n<p>The forum took place shortly after a Senate Judiciary subcommittee hearing that highlighted \u2063the negative impact\u200d of government \u2062inaction and weak \u2062regulations on AI development, which disproportionately benefits major \u2062tech corporations at the expense of American citizens.<\/p>\n<div class=\"my-5\">\n    <em>Andrew Thornebrooke contributed to this report.<\/em>\n  <\/div>\n<\/blockquote>\n<p> <\/p>\n<h2> How does\u200c the lack of transparency and explainability in AI systems pose challenges for regulators in ensuring \u200bcompliance with existing \u2062regulations?\u2064 <\/h2>\n<p><span>  \u200dErns about the \u200drisks posed by AI in\u2062 the financial sector. The Bank for International Settlements (BIS) has also warned about the potential\u2064 for AI to amplify existing risks \u2062and create new \u200cones in the financial \u200csystem.\u2062 In a recent report,\u200c the BIS highlighted the\u2064 need for regulators to develop \u200ca framework that addresses the challenges posed by AI\u2062 in areas such as data \u2063privacy, algorithmic fairness, and \u200dsystemic risks.<\/p>\n<p>One of the main challenges in regulating\u200d AI\u2063 is the lack\u200c of\u2064 transparency and\u200d explainability. AI systems\u200b often make decisions based \u2062on complex algorithms that are difficult\u2064 to interpret. This opacity can make it challenging for regulators to determine if AI systems are being used in a way\u2064 that complies \u200cwith existing regulations. Additionally, \u2063the\u2063 use of AI in\u2064 financial markets\u200b can also give rise to market manipulation and insider trading, further complicating the regulatory landscape.<\/p>\n<p>To address these challenges, Gensler suggests\u200c that regulators should consider implementing a framework \u2064that promotes transparency and accountability in AI<\/p>\n","protected":false},"excerpt":{"rendered":"<p>the financial system by the increasing adoption of AI. He emphasized the urgent need for regulatory intervention to prevent a potential financial crisis.<\/p>\n","protected":false},"author":2454,"featured_media":2070105,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[543],"tags":[],"class_list":["post-2070104","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-epoch-times"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2070104","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/2454"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=2070104"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2070104\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2070105"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=2070104"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=2070104"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=2070104"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}