WASHINGTON– The chairman of the SEC said he believes artificial intelligence and generative AI tools such as ChatGPT will lead to financial crises in the future.
Gary Gensler, noting the transformations the technologies are going to drive, continues to share his concerns that AI could be the next big systemic risk to the financial system. It’s an issue he has been speaking out on for years. In 2020, Gensler co-wrote a paper about deep learning and financial stability.
“It concluded that just a few AI companies will build the foundational models that underpin the tech tools that lots of businesses will come to rely on, based on how network and platform effects have benefited tech giants in the past,” the New York Times reported.
Two or Three Models
Now, Gensler has told the Times’ Dealbook report he expects the United States will most likely end up with two or three foundational AI models.
“This will deepen interconnections across the economic system, making a financial crash more likely because when one model or data set becomes central, it increases ‘herding’ behavior, meaning that everyone will rely on the same information and respond similarly,” Gensler told the Times. “This technology will be the center of future crises, future financial crises. It has to do with this powerful set of economics around scale and networks.”
Another issue: Gensler further suggested AI models may also put companies’ interests ahead of investors’.
Another Big Question
In addition, Gensler said there remain big questions around who, precisely, is legally liable for AI, something that will eventually need to be settled among policymakers. Gensler told the Times it’s fair to ask the companies to create mechanisms that are safe and that anyone who uses a chatbot is not delegating responsibility to the tech.
“There are humans that build the models that set up parameters,” he was quoted as saying.
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