Cook: Regulators must reach consensus on AI

Regulators should establish a consensus on the pros and cons of establishing rules for the artificial intelligence space, said Federal Reserve Gov. Lisa Cook.

Speaking Oct. 1 during a conference hosted by the Federal Reserve Bank of Atlanta, Cook said the consensus must be “on the benefits and costs of regulation of the use of AI in the areas of privacy, compensation for training data, perpetuation and amplification of bias and fraud.

Lisa Cook

“The ultimate outcomes could benefit from broader inclusion across demographic groups in the startup and research communities and attention to the potential effects on competition of the advantages of incumbent firms,” Cook added.   

Cook was optimistic on the benefits of AI during the conference, noting businesses can use the emerging technology to innovate without significant investment. While some businesses are using AI as a substitute for labor where there are shortages, others are using it to lower business costs, she said. Cook disagreed with concerns that AI will eliminate entire occupations, saying instead that it will complement existing industries while doing away with tasks that could be automated.    

Generative AI could also enable earnings increases for workers and an increase in purchasing power by sparking strong growth in labor productivity and efficiency, Cook said. She expects those developments will limit long-term labor costs and inflation. 

Cook’s comments came as the federal government continues to monitor the use of AI. In October 2023, President Joe Biden issued an executive order requiring developers of the most powerful AI systems to share their safety test results directly with the government. His order also called on the Department of Homeland Security to establish an AI Safety and Security Board. 

Also in 2023, the Consumer Financial Protection Bureau cautioned banks that they could violate consumer protection laws if chatbots fail to provide accurate information to customers and don’t protect their privacy and data.