WASHINGTON—United States Senator Bill Hagerty (R-TN), a member of the Senate Banking Committee, today joined Squawk Box on CNBC to discuss his opposition to both the Securities and Exchange Commission’s (SEC) predictive data analytics proposal to regulate Artificial Intelligence (AI) and the Senate border bill.
Hagerty on his opposition to the SEC’s proposal to regulate predictive data analytics and AI: “This is another example of poor rulemaking coming out of Washington, in particular the [Securities and Exchange Commission] in this case. You talk about [Artificial Intelligence] and trying to deal with that, but this rule is far too broadly drafted. It would encompass anything from a small calculator on a website to a spreadsheet; it’s not just focused on AI. And the impact of this will be increased compliance cost, increased liability, and therefore it will lessen the access of retail investors to the marketplace because the companies that are involved in this will just stop offering technological innovation. Again, far too broad based; they’re using a shotgun to do something that could be more of a rifle shot here.”
Hagerty on how he believes AI should be regulated: “I would do it in a much more targeted and focused manner. Again, the SEC is going to have a very difficult time of staying ahead of innovation. Remember, we have broad-based fiduciary laws right now on the books; they should step back and rely on those in the first instance, rather than try to anticipate a very rapidly moving technology like AI. You’ve done a great job earlier in this program talking about the innovations that are taking place and the speed of that innovation, and I think we run a foul of actually limiting accessibility to the marketplace, particularly when we talk about retail investors cutting them out just because the SEC can’t get it right. I’d rather see them step back, hands off for a while. Let’s see how this evolves.”
Hagerty on potential conflicts of interest with AI advising investors: “That would be precisely the same type of duty if it were a human doing this. I presume that what they would’ve done is digested the manual there for that company as they think about the rules and requirements that they have. The same would apply here; the same fiduciary obligations would apply. And if the company’s got a conflict of interest and is offering bad advice that conflicts, then they should be liable for that. I think the rules on the books right now deal with that. But again, the SEC is overreaching. It’s almost a nanny-state type of perspective where they’re trying to reach in and control everything. And the way this rule is drafted, it would actually stifle innovation, stifle retail investors’ access to new technologies, and I think it just is far too broad as it’s drafted right now.”
Hagerty on the federal government keeping up with innovative technology: “There are many approaches being discussed right now; I think the problem is that many of my colleagues and I—and I’ll include myself in this—are still in the learning phase. And what I don’t want to see happen are bureaucrats that have no market experience come in and try to anticipate where the technology is moving. When I have people come into my office literally every week, bringing us up to speed on how this is moving, I don’t think we’re there yet in terms of coming up with a regulatory framework that’s going to work in a positive manner, rather than just stifle innovation and put the United States behind other nations. I want to see this innovation happen here in America. Rather than stifle it, let’s understand it, and let’s try to use a light touch as we move forward, rather than come in and try to have all encompassing regulation that at this point in time, I think, far overshoots the mark.”
Hagerty on his opposition to the Senate border bill: “The bill that’s been presented today I think will fail on Wednesday; I’m certainly a no. What I want to see is a bill that actually provides border security. You know, it’s remarkable that in 2021, the Democrats said ‘there’s no problem at our southern border.’ In 2022, ‘there’s no crisis.’ [In] 2023, ‘there’s no crisis.’ Suddenly in 2024, they put forward this bill saying there’s a crisis and if the Republicans don’t vote for this bill, it’s the Republicans’ fault. Well, this bill has a lot of problems in it that will actually incentivize more illegal immigration. They’re talking about more than 20 billion additional dollars coming into this. We need to enforce the laws. We need airtight legislation that will force President [Joe] Biden’s hand to enforce the laws on the books. Instead, what we’ve got is a lot of funding to incentivize, to facilitate more processing of people. And frankly, I think it will tie the hands of the next Administration if we were to pass the legislation as it exists right now. So, I’m definitely a no on this.”
Hagerty on the problems the border bill would create for the next Administration: “This is just a messaging bill right now. It depends on how they spin it. President Biden’s already taken a victory lap on this. I think what he would do, though, if this were implemented, it would actually make President [Donald] Trump’s job much more difficult next year if he’s to win the election in November. President Trump demonstrated that the Executive authority exists today. President Biden came into office in 2021 and via Executive Order took down Remain in Mexico policies, safe third country policies, policies that were working, stopped building the wall—all of that can be reinstated immediately. What I don’t want to see is more capacity and more rapid processing of people, and frankly, more messaging going to the cartels that actually control the southern border and the northern border of Mexico, more messaging going to them, that there’s just a new path to come in the United States and here’s the way to do it. That’s what this legislation, again, as drafted right now, would actually accomplish. That’s a loss for the American citizens, a loss for the United States, and ask the people in New York and Chicago whether there was a crisis in 2020 versus what they’re experiencing right now.”