FAIRR Act

The FAIRR Act requires the Financial Stability Oversight Council to study and report on artificial intelligence risks to financial stability, including threats like AI-generated false information that could manipulate markets or disrupt institutions. It mandates the Council to identify regulatory gaps, recommend solutions (including referencing 2023 cybersecurity guidelines), and coordinate with financial institutions on scenario-based exercises to test defenses against AI-related market disruptions. The bill also imposes liability on entities deploying AI models in financial markets, holding them responsible for the model's actions unless they implement reasonable preventive measures. Additionally, it increases penalties for violations involving AI-manipulated media and requires regulators to ensure transparency in AI use for supervision.