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Committee refers bill on automated decision tools in lending after debate over human review and fraud safeguards
Summary
S.8115, to restrict automated decision tools in lending by state‑chartered institutions and require options for human review and error correction, was referred to Internet and Technology after extended discussion on scope and protections.
The Senate Banks Committee referred S.8115, sponsored by Sen. Sanders, to the Internet and Technology Committee after extended debate over how automated decision tools (ADTs) should be used in lending.
The bill would amend the banking law relating to the use of automated decision tools to make lending decisions. Committee members and counsel discussed who the bill would cover — state‑chartered banks — and practical issues such as whether applicants should be offered a human reviewer and how to distinguish inadvertent errors from intentional misstatements.
Sen. Mark Walzick asked whether applicants should be allowed to insist on human review. “Wouldn't you want to have the option to say to the person, I want a person instead of a machine?” he asked. Sen. George Burrell raised workforce concerns and said state‑chartered, community banks are most affected and may lack the staff to provide widespread human review. Burrell also warned of competitive imbalance if the standard does not apply to out‑of‑state banks.
Committee discussion highlighted two practical issues: allowing applicants to correct honest errors on loan applications and preventing misuse where a false statement would not be corrected. Counsel confirmed the bill permits a period to correct errors.
After debate the committee moved and seconded the bill; the chair said the measure would be referred to the Internet and Technology Committee for fuller consideration.
