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Federal Reserve Vice Chair Expresses Concern Over AI's Impact on Fair Housing Access

On Tuesday, the Federal Reserve's chief banking overseer, Michael S. Barr, expressed concern about the possible impact of artificial intelligence (AI) on the efforts to guarantee fair housing access for underprivileged communities.


Barr, who serves as the Vice Chair for Supervision at the Fed, acknowledged that AI has the capacity to enable individuals, who might otherwise struggle to secure credit, to gain access to it.


However, he also pointed out that this technology could be exploited for harmful purposes, specifically, to discriminate against certain communities and deny them housing opportunities, a practice historically known as "redlining."


"Despite their tremendous potential, these technologies also run the risk of violating fair lending laws and exacerbating the very disparities they could potentially resolve," Barr stated in his prepared speech for the National Fair Housing Alliance.


He exemplified that AI could be tweaked to carry out "digital redlining", a process that can lead to communities predominantly composed of minorities being denied access to credit and housing opportunities. Conversely, "reverse redlining" refers to a situation where "costlier or otherwise substandard products" in lending are disproportionately targeted towards minority regions.


Barr highlighted that the work carried out by the Federal Reserve and other regulatory authorities on the Community Reinvestment Act aims to ensure that underserved communities are given equal access to credit.

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