Rep. Foster Introduces Bill to Improve Financial Sector Security Amid Rising AI Risks
Washington, DC — Today, Congressman Bill Foster (D-IL) introduced legislation to strengthen oversight of technology service providers that support the financial services industry as advances in artificial intelligence (AI) create new risks for financial institutions and their customers.
The Strengthening Oversight for the Financial Sector Act would give the National Credit Union Administration (NCUA) and the Federal Housing Finance Agency (FHFA) the authority to oversee third-party vendors used by the entities they regulate. This authority, which is available to other federal financial regulators, had been temporarily granted to the NCUA, but has since expired, leaving a dangerous gap in oversight.
As AI makes it easier to identify and exploit vulnerabilities, reliance on third-party technology vendors could provide an attractive opening for attacks on financial institutions. This bill would close that gap and help protect consumers, financial institutions, and the broader financial system from outside threats.
“As AI makes cyberattacks more sophisticated, it is even more important to ensure that third-party vendors don’t become a weak link in our financial system,” said Rep. Foster. “We have learned the hard way how much damage supply chain vulnerabilities can cause, and third-party vendors are attractive targets. This bill will give regulators the tools they need to better protect Americans’ money and sensitive data as AI-assisted cyber threats grow.”
The authority to oversee third-party vendors has been requested by NCUA and FHFA directors from both political parties. The Government Accountability Office and the Financial Stability Oversight Council have made similar recommendations regarding the need for oversight of third-party vendors' vulnerabilities to AI risk.
A version of this legislation passed the House Financial Services Committee in the 117th Congress, but did not receive a floor vote.
A copy of the bill is available here.
###