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The Question of AI Regulation – Rohan Sivakumar University of Chicago, Gabriel Philipp, Siena University

 At 10:00 am on 7/30/25, the Senate Banking Subcommittee on Securities, Insurance, and Investment convened a panel of three industry experts to gain clarity on the best path forward in the age of Artificial Intelligence (AI). 

All three witnesses provided an optimistic view of AI, particularly in its widespread integration and adoption by American industries. Apart from a few questions from Senator Jack Reed (D-RI) and Catherine Cortez Masto (D-NV) regarding the impact of the current administration’s attitude towards climate change on the insurance industry, the hearing was largely apolitical. 

Throughout the hearing, there was a significant emphasis on how AI can be developed safely and in ways that benefit the population over corporate enterprises. There was a reference to a speech given by Geoffrey Hinton, 2024 Nobel Physics Prize winner, warning about the future of AI development. He points out within his speech that AI has two ways it could be developed. It could be a tool that will help solve and support some of the world's biggest issues, or we could develop it to maximize profit, which will eventually lead to AI developing systems that ignore the needs of the people. A message that was reciprocated throughout the hearing, as multiple senators talked about how AI development can solve social issues or make them worse. It displays what policymakers are thinking about when trying to regulate AI. 

There is a clear understanding that AI is the future and needs to be developed, but there have to be limitations in order to protect the safety of the government and protection of the people. Senator Britt (R-AL) likened the emergence of AI to that of social media and urged for regulation, as the lack thereof regarding social media has led to massive negative consequences, particularly on the youngest generation. 

While there was not much by way of creating a regulatory framework, what senators and witnesses seemed to agree on was the need for a public-private regulatory body for AI adoption, particularly in capital markets. Ranking Member Warner (D-VA) emphasized this in his questioning of Nasdaq President Tal Cohen. Moreover, President Cohen warned against state-level AI regulation, as he believed it would hamper AI innovation and promote regulatory arbitrage, leaving localities and the US at a disadvantage on the national and global scale, respectively. 

How are we seeing this sentiment reflected in legislation? The White House recently issued an ‘AI Action Plan’, which ostensibly has a focus on AI innovation and infrastructure. The Senate Bill potentially being drafted will likely accord with the plan, creating loose guardrails that, hopefully, promote innovation responsibly. 

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