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As artificial intelligence becomes more embedded in financial services, a new Government Accountability Office (GAO) report found that most federal financial regulators continue to rely on existing laws and frameworks to oversee its use — while selectively expanding AI-specific supervision and guidance.
The GAO report, Artificial Intelligence: Use and Oversight in Financial Services, stated that financial regulators believe their current statutory authorities are generally sufficient to monitor AI risks. Agencies like the Office of the Comptroller of the Currency (OCC), Consumer Financial Protection Bureau (CFPB) and Securities and Exchange Commission (SEC) have issued targeted guidance, launched AI-specific exams and taken enforcement actions to address emerging concerns.
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For example, the CFPB has issued multiple circulars clarifying how adverse action notices should apply when AI models are used in credit decisions. The SEC has conducted reviews of investment firms’ AI governance practices and brought enforcement actions for misleading claims related to AI use. The OCC has completed multi-year reviews of large banks' AI models and risk management practices, offering specific recommendations on bias and model complexity.
In contrast, the NCUA lags behind its peers. The GAO found that the NCUA’s guidance is outdated, narrowly focused on interest rate modeling and insufficient for supervising AI applications in lending, fraud detection and member service. Additionally, the NCUA is the only banking regulator without authority to examine third-party technology service providers — a limitation the GAO has warned about since 2015.
The report warned that this regulatory gap poses risks for credit unions and their members as institutions increasingly rely on external vendors to deploy advanced AI tools. The GAO recommended that Congress grant the NCUA third-party oversight authority and that the agency modernize its risk management guidance to align with emerging AI practices.
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Michael Ogden
Editor-in-Chief at CU Times. To connect, email at [email protected]. As Editor-in-Chief of CU Times since 2016, Michael Ogden has led the editorial team in all aspects of content strategy and execution, including the creation of the publication’s exclusive and proprietary research database of the credit union industry’s economic landscape. Under Michael’s leadership, CU Times has successfully shifted to an all-digital editorial product with new focuses on the payments, fraud, lending and regulatory beats. Most recently, he introduced a data-focused editorial product for subscribers that breaks down credit union issues into hard data, allowing for a deeper and more factual narrative for readers. In 2024, he launched the "Shared Accounts With CU Times" podcast, which offers a fresh, inside-the-newsroom perspective through interviews with leaders from the credit union industry and the regulatory world. He dives into pressing credit union issues, while revealing the personalities working behind-the-scenes to push the credit union world forward. His background includes years as a radio and TV anchor/reporter and a public relations and digital/social media manager, where he covered the food and music industries, as well as cooperatives and credit unions. Over the years, he has launched numerous exclusive video and podcast series, including a successful series of interactive backstage interviews with musicians at music festivals, showcasing his social media and live streaming production skills.
