Fed’s Brainard wary of black box AI models in consumer credit
Speech raises explainability issue; says existing model risk guidelines are “a good place to start” in regulating AI
US Federal Reserve governor Lael Brainard has urged banks to tread carefully when using machine learning (ML) techniques, which have become notorious for generating conclusions that are difficult to decipher, if not outright opaque.
Speaking at a fintech conference in Philadelphia, she singled out consumer lending as an area where understanding how ML models work is critical. “One area where the
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