WASHINGTON–Five federal financial regulatory agencies, including NCUA, said they have extended the comment period on the request for information on financial institutions’ use of artificial intelligence (AI) until July 1, 2021.
Separately, NCUA has sent a Letter to Credit Unions with a reminder on the transition away from LIBOR.
On the comment period extension, the agencies said they are seeking information from the public on how financial institutions use AI in their activities, including fraud prevention, personalization of customer services, credit underwriting, and other operations.
“More specifically, the RFI seeks comments to better understand the use of AI, including machine learning, by financial institutions; appropriate governance, risk management, and controls over AI; and challenges in developing, adopting, and managing AI,” the agencies said.
The agencies added they extended the comment period to allow stakeholders more time to coordinate and prepare their comments, which were originally due by June 1, 2021.
LIBOR Letter
Separately, NCUA sent a Letter to Credit Unions reminding the London Inter-bank Offered Rate (LIBOR) administrator announced it will stop publishing the one-week and two-month LIBOR settings immediately following the Dec. 31, 2021, LIBOR publication. The remaining LIBOR settings will cease immediately following the LIBOR publication on June 30, 2023.
While the extension of the publication of certain LIBOR settings through June 30, 2023, is not an opportunity to continue using LIBOR, it will allow some legacy LIBOR contracts to mature naturally, NCUA said.
The agency said it is encouraging all federally insured credit unions to transition away from using the U.S. dollar LIBOR settings as soon as possible, but no later than Dec. 31, 2021. Failure to prepare for LIBOR disruptions could undermine a federally insured credit union’s financial stability, and safety and soundness, NCUA said.
:As noted in the Federal Financial Institutions Examination Council’s (FFIEC) July 1, 2020, Joint Statement on Managing the LIBOR Transition, the LIBOR transition is a significant event that credit unions should manage carefully,” the agency wrote. “The FFIEC statement recommends that new financial contracts use a reference rate other than LIBOR or have robust fallback language that includes a clearly defined alternative reference rate after LIBOR’s discontinuation.”