Lawmaker Calls on Banking Industry to Adopt a Federally Designated, Open Source Software Stack, Real-time Regulatory Dashboards, and Standardized Reporting
Rep. Bill Foster, D-IL, thinks ‘we are not ready’ as AI could trigger bank runs in seconds. As part of his proposed solution to this banking challenge, open source software play a critical role.
To address the risks posed by agentic AI and cybersecurity AI models, a lawmaker at a House Financial Services Committee hearing on June 4 urged banking regulators to adopt real-time regulatory dashboards, standardized reporting and a federally designated, open source software stack. Rep. Bill Foster, D-IL, the ranking member of the subcommittee on financial institutions on the House Financial Services Committee warned federal banking regulators at a recent House Financial Services Committee hearing that “I don’t think that we are prepared for an agentic AI bank run”. In a recent interview with Banking Dive, Rep. Foster went into more details. We are familiar with algorithmic trading of stocks, but now with tools, like OpenClaw that allow consumers to create personal AI agents we are now in an era of algorithmic banking where based on the consumer’s pre-determined specifications, AI agents can in an automated fashion 24/7 move deposits in search of better rates or move money out of accounts based on news reports or social media posts thus possibly causing banks runs in a matter of minutes.
On the subject of a federally designated open source software stack, the congressman talks about a “open source software stack that does everything from back-office accounting to regulatory compliance, and reporting on pledgeable assets to the discount window – a complete set of software that effectively operates in real time, so when the bank run starts at 2 a.m. on a Sunday, the Federal Reserve has visible, in real time, all of your pledgeable assets”. A standard, open source software stack would ensure that the smaller and mid-sized banks would have the same level of cyber defense and other capabilities as the larger banks. Rep. Foster challenges the banking industry and open source groups like FINOS to come up with some reference implementations of things like real-time regulatory reporting and dashboards.
The Banking Dive interview with Rep. Foster which was published on June 16 is available at https://www.bankingdive.com/news/agentic-ai-bank-run-mythos-cyber-foster-house-financial-services/822993/