Banking and Finance Law Daily Wrap Up, FINANCIAL TECHNOLOGY—Waters seeks information on AI risks, impact on financial services, (Jul 8, 2026)
By A. Bryan Gerepka
Given the critical role of the financial and housing markets, the Committee should play a leading role in overseeing the adoption of AI in the financial services and housing industries.
Representative Maxine Waters (D-Calif.) has issued a formal Request for Information (RFI) inviting consumer advocates, industry experts, regulators, and the public to submit feedback on the use of Artificial Intelligence (AI) in the financial marketplace. Waters is the Ranking Member of the House Financial Services Committee.
Background. The RFI is part of the Committee's ongoing work to examine the impact of AI on the financial marketplace and “to help inform a modern federal framework that encourages responsible innovation while protecting consumers, investors, small businesses, and our nation’s financial markets,” Waters stated.
“Through these efforts, the Committee worked to ensure that regulators and the law were adapting to the changing landscape to promote responsible innovation and expand access to affordable financial products and services,” Waters wrote. “Given the critical role of the financial and housing markets, the Committee should play a leading role in overseeing the adoption of AI in the financial services and housing industries,” she added.
AI models raise concerns. The Committee highlighted recent warnings from Anthropic regarding the cyber and systemic threats posed by advanced AI models. Considering these developments, the Committee is seeking feedback on current federal laws and potential regulatory gaps on AI use in the financial marketplace.
The Committee Democrats set Aug. 14, 2026, as the deadline for responses on the following topics:
Federal Oversight and Review Process. Recommendations for the Department of the Treasury and its role in the process, especially for advanced AI models, national security scrutiny, rollout processes, and maintaining human control over AI.
Industry Practices and Security Initiatives. Provide examples of responsible AI frameworks that financial services and housing firms have adopted and complied with before the Mythos and ChatGPT-5.5-Cyber developments? How should firms rethink existing frameworks to improve safety measures? What criteria will be used to determine which firms participate in industry initiatives such as Project Glasswing, where Anthropic allowed a private consortium of security and industry partners to fix system vulnerabilities in Mythos? The committee raised concerns that some institutions may be disadvantaged by this type of selective process.
Model Fairness, Explainability, and Risk Management. The complexity of AI decision-making processes can make it challenging for human programmers to predict what the program will do and explain the reasoning behind its decisions. What are the standards for explaining AI decisions, such as credit underwriting, and establishing required controls for pre-and post-deployment of AI models? In addition, what changes, if any, should regulators and Congress consider making for the Revised Guidance on Model Risk Management, given recent AI developments?
Data Privacy and Disclosures. While Congress has enacted a variety of federal laws designed to promote data privacy and protect individuals’ personal information, these protections may be inadequate when AI is used. What steps can Federal regulators take, including amending existing laws and utilizing existing authorities, to improve data privacy in the financial and housing marketplace for the benefit of consumers? How can this be balanced with the necessary access to data required for customer identification, standardized reporting and data mapping, model training, and financial crime compliance?
Third-Party Service Providers. Digitalization in banking continues to expand, despite prudential regulators' concerns that reliance on third-party technology solutions presents operational risks. What steps should Congress take to monitor risks from third-party AI vendors, ensure continued regulatory oversight, and ensure that smaller institutions receive access to AI models?
Liability. What liability, if any, should be applied to financial institutions and/or third-party service providers if AI use violates Federal law or regulation, especially if consumers are harmed? What law(s) should be amended to create this liability framework? Should there be safe harbors provided in certain circumstances? Please explain why any proposed changes may be warranted.
Capital Markets and Investor Protection. Noting that the Securities and Exchange Commission (SEC) has not issued AI-specific guidance, the Committee asked for input on what standards Congress and/or the SEC should establish for the use of AI by issuers related to public company disclosures, internal controls, and fiduciary responsibilities. In addition, how should regulators address risks that AI systems pose to market integrity?
Housing and PropTech. The Committee raised concerns about the widespread use of automated digital tools and property technology (PropTech) in real estate transactions. What tenant protections should be implemented to ensure transparency and compliance with fair lending laws?
National Security and Financial Crime. How can Congress and regulators work with the financial services industry to address the threat of bad actors using smaller institutions to access and subsequently compromise the core banking infrastructure? How can industry and government collaborate to deploy new anti-crime technologies responsibly, help examiners adopt AI crime prevention methodologies, and adapt customer identification for AI.
Export-Import Bank (EXIM) and AI Data Centers. What is the EXIM Bank’s role in financing AI-related projects, such as data centers, and will these projects fit the bank’s mandates of job creation and support for small businesses and exporters?
Workforce and Training. Address workforce challenges and inequalities from AI-driven job displacement.
AI Data Centers and Community Impact. How do data centers affect grid capacity, water quality and usage, electric consumption, and other environmental impacts in different communities?
Financial Stability. What steps should regulators take to address financial stability risks from AI, including use of AI by regulators to monitor and mitigate risk?
International Development. If implemented correctly, AI has the potential to bypass several development challenges that have long stymied growth in developing economies. How can international financial institutions help developing countries access and integrate AI?
LegislativeActivity: AINews BankingOperations CrimesOffenses FinancialStability FinTech OversightInvestigations Privacy