There’s a calamity on the horizon if you believe Gary Gensler, Chairman of the US Securities and Exchange Commission (SEC). America’s top Wall Street watchdog has issued a dire warning about artificial intelligence: if regulators don’t act now, Gensler said it’s “nearly unavoidable” that AI will trigger a financial meltdown in the next ten years. The problem is a world where major financial institutions all harness the same AI models, Gensler said in a Sunday interview with the Financial Times. There aren’t many AI models to choose from, and if everyone uses identical tools, that could lead to herd behavior where banks or other major economic players make the same decisions at the same time. Under those conditions, a sudden shift in the market could spark a chain reaction that brings on the next calamity. “I do think we will in the future have a financial crisis,” Gensler said, and “in the after-action reports people will say ‘Aha! There was either one data aggregator or one model . . . we’ve relied on.’ Maybe it’s in the mortgage market. Maybe it’s in some sector of the equity market.” We’re already charging ahead in that direction. As the Financial Times points out, the finance industry has already rolled out a number of AI tools for consumers and employees alike. Many firms already base their entire business models on data analysis. Over the last year, AI has migrated from gate-kept tools for people with advanced computer science training to increasingly accessible and inexpensive technology that can be rolled out with relative ease.
Full story : SEC Chairman Gary Gensler warns of an AI-driven financial disaster in next ten years.
