Middle-Market Public Policy Roundup

In this week’s roundup, we look at a House Financial Services subcommittee meeting that will focus on the current and future impact of artificial intelligence on the finance industry. We also examine recent developments in U.S. trade policy following comments made by President Donald Trump this week. 

House Subcommittee to Discuss AI in the Financial Services Industry 

Are financial markets on the verge of being taken over by artificial intelligence? That’s the question a House Committee on Financial Services subcommittee is seeking to answer at a hearing on Friday.

Organized by the HFSC’s Task Force on Artificial Intelligence, the Dec. 6 hearing, “Robots on Wall Street: The Impact of AI on Capital Markets and Jobs in the Financial Services Industry,” will explore AI’s impact on investment decisions, workforce disruption and regulatory compliance.

Policymakers will hear from a wide range of witnesses, including academics, investment advocacy groups and chief Nasdaq personnel.

According to a memo released by the House Financial Services Committee in advance of the hearing, the application of AI can better evaluate assets and overcome some of the irrational behavior of human investors, but there are questions over accountability if things go wrong.

The committee cited a 2019 legal dispute where investors sued a company that employed AI to make automated transactions that led to a loss of $20 million. The case raised questions over who should be held liable since no human made the decisions.

The memo also cited studies that assessed how AI would affect the labor market in the financial sector. One study found advanced software could eliminate 200,000 jobs in the banking industry over the next 10 years, highlighting the need to address job security.

Lastly, the committee is also concerned over whether the industry is prepared to respond if individuals or financial institutions use AI or other advanced technologies to circumvent compliance or commit crime.

China Deal Uncertain as Trump Pledges Wider Trade War

Earlier this week, President Donald Trump said a deal to end the nearly two-year trade dispute with China may be pushed until after the 2020 presidential elections.

At a NATO summit held in London Tuesday, Trump told reporters his administration has not set a deadline to complete an agreement that would resolve the trade war between the world’s two largest economies that began in March 2018.

“In some ways, I think it’s better to wait until after the election, [if] you want to know the truth,” he said.

Earlier that day, the president said he wasn’t sure whether he wants to make the deal currently being negotiated by U.S. and Chinese officials. “We’ll see whether or not the deal is going to be right. It’s got to be right,” he said.

The president lauded a breakthrough in the trade war in October, when Chinese officials agreed to purchase billions of dollars in U.S. agricultural products.

Tuesday’s announcements came a day after the president announced his intention to reimpose tariffs on metal imports from Brazil and Argentina after the two countries were exempted in 2018.

The president accused the two South American countries of devaluing their currencies, thereby putting U.S. exports at a disadvantage.

“Therefore, effective immediately, I will restore the Tariffs on all Steel & Aluminum that is shipped into the U.S. from those countries,” Trump wrote on Twitter.

Despite the president’s pledge to reintroduce the duties, U.S. trade policy has not yet been altered.