Tag: transparency

Request for Information on Uses, Opportunities, and Risks of Artificial Intelligence in the Financial Services Sector

Mary Pat Campbell

Link: https://www.federalregister.gov/documents/2024/06/12/2024-12336/request-for-information-on-uses-opportunities-and-risks-of-artificial-intelligence-in-the-financial

Excerpt:

SUMMARY:

The U.S. Department of the Treasury (Treasury) is seeking comment through this request for information (RFI) on the uses, opportunities and risks presented by developments and applications of artificial intelligence (AI) within the financial sector. Treasury is interested in gathering information from a broad set of stakeholders in the financial services ecosystem, including those providing, facilitating, and receiving financial products and services, as well as consumer and small business advocates, academics, nonprofits, and others.

DATES:

Written comments and information are requested on or before August 12, 2024.

….

Oversight of AI—Explainability and Bias

The rapid development of emerging AI technologies has created challenges for financial institutions in the oversight of AI. Financial institutions may have an incomplete understanding of where the data used to train certain AI models and tools was acquired and what the data contains, as well as how the algorithms or structures are developed for those AI models and tools. For instance, machine-learning algorithms that internalize data based on relationships that are not easily mapped and understood by financial institution users create questions and concerns regarding explainability, which could lead to difficulty in assessing the conceptual soundness of such AI models and tools.[22]

Financial regulators have issued guidance on model risk management principles, encouraging financial institutions to effectively identify and mitigate risks associated with model development, model use, model validation (including validation of vendor and third-party models), ongoing monitoring, outcome analysis, and model governance and controls.[23] These principles are technology-agnostic but may not be applicable to certain AI models and tools. Due to their inherent complexity, however, AI models and tools may exacerbate certain risks that may warrant further scrutiny and risk mitigation measures. This is particularly true in relation to the use of emerging AI technologies.

Furthermore, the rapid development of emerging AI technologies may create a human capital shortage in financial institutions, where sufficient knowledge about a potential risk or bias of those AI technologies may be lacking such that staff may not be able to effectively manage the development, validation, and application of those AI technologies. Some financial institutions may rely on third-party providers to develop and validate AI models and tools, which may also create challenges in ensuring alignment with relevant risk management guidance.

Challenges in explaining AI-assisted or AI-generated decisions also create questions about transparency generally, and raise concerns about the potential obfuscation of model bias that can negatively affect impacted entities. In the Non-Bank Report, Treasury noted the potential for AI models to perpetuate discrimination by utilizing and learning from data that reflect and reinforce historical biases.[24] These challenges of managing explainability and bias may impede the adoption and use of AI by financial institutions.

Author(s): Department of the Treasury.

Publication Date: 6/12/2024

Publication Site: Federal Register

What You Can Do To Force Your State Pension To Be Transparent About Its Investments

Mary Pat Campbell

Link: https://pensionwarriorsdwardsiedle.substack.com/p/what-you-can-do-to-force-your-state

Excerpt:

So what can you do to force your state or local government pension to be more transparent? That’s a question I asked Marc Dann, an attorney in private practice in Ohio and the former Attorney General of Ohio. (Dann is currently litigating a public records request on my behalf against the State Teachers Retirement System of Ohio.)

Say attorney Dann: “Refer to your state’s public records laws in making a request. Be as detailed and specific in the request as you can possibly be. Remember public records are only those records that may actually exist. For example, instead of asking for a list of all hedge, private equity or venture capital fund investments, ask for a prospectus, offering documents or reports provided to the pension by each investment fund (and name the investment funds—which are generally named on the state or local pension’s website).  Most states allow legal fee-shifting in public records lawsuits. So if the pension or fund resists, you may wish to consider bringing in a lawyer who agrees to be paid his fee from any recovery from the pension. Don’t forget to reach out to allied members of your state legislature or city council who can put pressure on the pensions to properly respond to the requests.”

Author(s): Edward Siedle

Publication Date: 22 Mar 2023

Publication Site: Pension Warriors on substack

Government Financial Reporting – Data Standards and the Financial Data Transparency Act

Mary Pat Campbell

Link: https://xbrl.us/events/230124/

Date and Time of upcoming event: 3:00 PM ET Tuesday, January 24, 2023 (60 Minutes)

Description:

The U.S. Congress passed legislation on December 15, 2022 that includes requirements for the Securities and Exchange Commission to adopt data standards related to municipal securities. The Financial Data Transparency Act (FDTA) aims to improve transparency in government reporting, while minimizing disruptive changes and requiring no new disclosures. The University of Michigan’s Center for Local State and Urban Policy (CLOSUP) has partnered with XBRL US to develop open, nonproprietary financial data standards that represent government financial reporting which could be freely leveraged to support the FDTA. The Annual Comprehensive Financial Reporting (ACFR) Taxonomy today represents general purpose governments, as well as some special districts, and can be expanded upon to address all types of governments that issue debt securities. CLOSUP has also conducted pilots with local entities including the City of Flint.

Attend this 60-minute session to explore government data standards, find out how governments can create their own machine-readable financial statements, and discover what impact this legislation could have on government entities. Most importantly, discover how machine-readable data standards can benefit state and local government entities by reducing costs and increasing access to time-sensitive information for policy making.

Presenters:

  • Marc Joffe, Public Policy Analyst, Public Sector Credit
  • Stephanie Leiser, Fiscal Health Project Lead, Center for Local, State and Urban Policy (CLOSUP), University of Michigan’s Ford School of Public Policy
  • Campbell Pryde, President and CEO, XBRL US
  • Robert Widigan, Chief Financial Officer, City of Flint

Publication Site: XBRL.us

Hospitals Are Flouting — And Fighting — Price Transparency Rules

Mary Pat Campbell

Link: https://www.levernews.com/hospitals-are-flouting-and-fighting-price-transparency-rules/

Excerpt:

The vast majority of U.S. hospitals are ignoring a new bipartisan federal law that requires the facilities to make their service prices available to the public, new research shows, and the Biden administration is facing growing criticism for not doing enough to enforce compliance with the landmark rule.

Now one state, Colorado, has taken matters into its own hands, passing an innovative law to bring its hospitals into compliance with the federal price transparency requirements — despite health care lobbyists’ efforts to sink the legislative effort.

….

Against the backdrop of limited federal enforcement, Colorado is leading the charge on creatively bringing hospitals into compliance, thanks to a new state law: House Bill 1285.

The law, recently signed by Gov. Jared Polis (D) and effective starting this August, has dual goals of accelerating the timeline on which hospital systems must meet the federal mandate, and curbing the crippling medical debt that plagues more than 100 million Americans.

The measure adds a state-level enforcement mechanism by requiring that hospitals be in compliance with the federal pricing transparency act in order to send Coloradans to collections for medical bills.

David Silverstein, founder and chairman of patient advocacy organization Broken Healthcare, wrote the bill and spearheaded the effort to get it across the finish line.

Author(s): Aditi Ramaswami

Publication Date: 27 Jun 2022

Publication Site: The Lever

Putin, Russian Pals “Mystery” Partners In Public Pension Deals?

Mary Pat Campbell

Link: https://www.forbes.com/sites/edwardsiedle/2022/03/10/putin-russian-pals-mystery-partners-in-public-pension-deals/?sh=3057aa8524af

Excerpt:

America’s state and local government pensions invest as much as 40 percent of their assets in secretive, offshore “alternative” hedge, private equity, real estate and venture funds which warn that certain unidentified “mystery investors” pay lower fees, are provided greater information about investment strategies and portfolio holdings, have been granted liquidity preferences and receive superior net performance—all at the expense of America’s public sector workers. How many wealthy Russians are “mystery investors” in these pension deals which, according to an internal FBI document leaked last year, criminals and foreign adversaries regularly use to launder money? Wall Street refuses to say and public pensions have promised not to ask. Ironically, the invasion of Ukraine and calls to dump Russian investments to punish the country are drawing attention to the ugly fact that America’s public pensions have long consented to being kept in the dark by Wall Street, abrogating their duty to monitor and safeguard workers’ retirement savings.

….

For example, my second investigation of the Rhode Island state pension revealed in 2015 that contrary to the pension’s financial reports, 40 percent of the pension’s investments—not the 25 percent disclosed—had been allocated to secretive alternative investments.

….

It’s no secret that the FBI suspects that many alternative investment vehicles are widely utilized for money laundering. In 2019, the FBI compiled a report titled “Financial Crime Threat Actors Very Likely Laundering Illicit Proceeds Through Fraudulent Hedge Funds and Private Equity Firms to Obfuscate Illicit Proceeds.” Then, a leaked May 1, 2020 internal FBI report similarly titled “Threat Actors Likely Use Private Investment Funds to Launder Money, Circumventing Regulatory Tripwires” purported to supplement the January 2019 report “by providing recent reporting of hedge funds and private equity firms used to launder illicit proceeds, and expands the threat context beyond financial threat actors to include foreign adversaries.”

Author(s): Edward Siedle

Publication Date: 10 Mar 2022

Publication Site: Forbes

19,000 Retired Ohio Teachers Want Pension Prospectuses, Wall Street Wolves Say No Way

Mary Pat Campbell

Link:https://www.forbes.com/sites/edwardsiedle/2021/11/09/19000-retired-ohio-teachers-want-pension-prospectuses-wall-street-wolves-say-no-way/

Excerpt:

For nearly two decades, alternative investment managers have been permitted to handle public pension money while they refuse to play by the rules applicable to these funds and submit to public scrutiny.

Wall Street alternative managers have successfully argued that the very same investment information widely distributed to wealthy individuals somehow amounts to “trade secrets” exempt from public records laws… when requested by state workers.

While it’s not surprising Wall Street’s biggest gamblers want to keep investors in the dark as to their misdeeds, it’s unconscionable that STRS Ohio and other public pensions around the nation are willing to abandon transparency, exposing workers to unfathomable risks and jeopardizing their retirement security.

Alternative investment managers may seek to keep secrets, but it’s no secret what’s often in these well-guarded documents: excessive and illegal fees; outrageous conflicts of interest and self dealing; fiduciary breaches and outright violations of law—even criminal conduct. For example, eight years ago the SEC staff found that a majority of private equity firms inflate fees and expenses charged to companies in which they hold stakes.

Author(s): Edward Siedle

Publication Date: 9 Nov 2021

Publication Site: Forbes

CalPERS Desperate Response to Suit Over Illegal Secret Board Discussions and Other Abuses Seeks to Drag Case Out as Long As Possible

Mary Pat Campbell
CalPERS Desperate Response to Suit Over Illegal Secret Board Discussions and Other Abuses Seeks to Drag Case Out as Long As Possible

Excerpt:

Jelincic is challenging CalPERS’ dubious denials of two different Public Records Act requests he made. One focuses on impermissible secret board discussions shortly after Chief Investment Officer Ben Meng’s sudden resignation last August. The filing not only calls for these records to be made public but also demands that board members be released to discuss all the matters that CalPERS impermissibly covered in the August “closed session”. The second involves CalPERS’ continuing efforts to hide records showing how it overvalued real estate investments by $583 million. Yet CalPERS not only has said nary a peep about bogus valuations are larger than the total amount it was slotted to invest in a mothballed solo development project, 301 Capitol Mall, but it continues to publish balance sheets that include the inflated results.

We predicted that CalPERS would be be even more inclined than usual to fight these Public Records Act requests because the filing seeks remedies beyond release of the records. First, it requests that CalPERS be found to have violated the Bagley-Keene Open Meeting Act. Second, to the extent that the judge rules that the board discussed items in closed session that should have been agendized for and deliberated in open session, the suit asks that board members be permitted to disclose the contents of those particular discussions in public. Third, the filing calls on the court to require that CalPERS make video and audio recordings of all closed sessions and keep them for five years (this is something that CalPERS currently does but this obligation is meant to shut the door to “the dog ate my disk” pretenses down the road.)

Author(s): Yves Smith

Publication Date: 3 June 2021

Publication Site: naked capitalism