FAIRR Act
The source supplies the latest action, but no lifecycle stage.
Latest action (12 Jun 2024): Committee on Banking, Housing, and Urban Affairs. Hearings held. Hearings printed: S.Hrg. 118-558.
What this bill does
The FAIRR Act (S. 3554) would amend federal financial-regulation law to address risks that artificial intelligence poses to the financial system. It would direct the Financial Stability Oversight Council to coordinate with federal financial regulators, research AI use by financial institutions, identify AI-related threats (such as fraudulent or manipulated media used to disrupt markets), and report to Congress within 180 days with findings and recommendations. It also requires scenario-based testing exercises for AI-related market disruptions. Separately, the bill expands regulators' authority to examine third-party service providers—including AI vendors—used by credit unions and by Fannie Mae/Freddie Mac-related entities. It increases potential civil penalties (up to triple) for securities violations involving "machine-manipulated media" and creates a new liability standard holding those who deploy AI models responsible for the model's actions in securities matters, unless they took reasonable preventive steps.
The bill would affect financial regulators (such as the Federal Reserve, FHFA, NCUA, and SEC), financial institutions, AI vendors serving them, and market participants generally, by increasing oversight, reporting requirements, and legal accountability related to AI use in finance.
The bill was introduced in the Senate on December 18, 2023, by Senator Mark Warner (with Senator Kennedy), referred to the Senate Banking, Housing, and Urban Affairs Committee, and has not received a vote. As with most introduced bills, it would need committee action and further votes in both chambers before it could become law.
Plain-English summary generated by Bill100 AI from the official record. Always verify against the source below.
Official summary
Financial Artificial Intelligence Risk Reduction Act or the FAIRR Act
This bill addresses the impact of artificial intelligence on financial markets.
The bill requires the Financial Stability Oversight Council to coordinate with agencies regarding threats to the financial system posed by artificial intelligence, including the use of false representations of the likeness, speech, or actions of persons to manipulate or to cause disruptions to financial markets. The council must report on its findings and make policy recommendations to Congress. After congressional review, the council must implement these recommendations.
The Securities and Exchange Commission is allowed to seek treble civil penalties for violations of federal securities exchange law that involve machine-manipulated media.
The bill establishes liability for a person who, directly or indirectly, deploys or causes to be deployed an artificial intelligence model involved in a securities law violation.
The bill also provides for the regulation and supervision of certain financial organizations and service providers. For example, if a credit union that is subject to examination by the Board of Directors of the National Credit Union Administration delegates the performance of certain activities and services, this delegation must be disclosed and is subject to regulation and examination by the board.
Timeline
12 Jun 2024
Committee on Banking, Housing, and Urban Affairs. Hearings held. Hearings printed: S.Hrg. 118-558.
Common questions
- What does S. 3554 do?
- The FAIRR Act (S. 3554) would amend federal financial-regulation law to address risks that artificial intelligence poses to the financial system. It would direct the Financial Stability Oversight Council to coordinate with federal financial regulators, research AI use by financial institutions, identify AI-related threats (such as fraudulent or manipulated media used to disrupt markets), and report to Congress within 180 days with findings and recommendations. It also requires scenario-based testing exercises for AI-related market disruptions. Separately, the bill expands regulators' authority to examine third-party service providers—including AI vendors—used by credit unions and by Fannie Mae/Freddie Mac-related entities. It increases potential civil penalties (up to triple) for securities violations involving "machine-manipulated media" and creates a new liability standard holding those who deploy AI models responsible for the model's actions in securities matters, unless they took reasonable preventive steps. The bill would affect financial regulators (such as the Federal Reserve, FHFA, NCUA, and SEC), financial institutions, AI vendors serving them, and market participants generally, by increasing oversight, reporting requirements, and legal accountability related to AI use in finance. The bill was introduced in the Senate on December 18, 2023, by Senator Mark Warner (with Senator Kennedy), referred to the Senate Banking, Housing, and Urban Affairs Committee, and has not received a vote. As with most introduced bills, it would need committee action and further votes in both chambers before it could become law.
- Has S. 3554 become law?
- The source does not supply a confirmed lifecycle stage for S. 3554. Check the latest action and official source below.
- Who sponsored S. 3554?
- S. 3554 was sponsored by Sen. Warner, Mark R. [D-VA] (D-VA), with 1 cosponsor.
- What's the latest action on S. 3554?
- Committee on Banking, Housing, and Urban Affairs. Hearings held. Hearings printed: S.Hrg. 118-558. (12 Jun 2024).
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