Sign up for our daily briefing

Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on the day's biggest business stories

Subscribe to Axios Closer for insights into the day’s business news and trends and why they matter

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Stay on top of the latest market trends

Subscribe to Axios Markets for the latest market trends and economic insights. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sports news worthy of your time

Binge on the stats and stories that drive the sports world with Axios Sports. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tech news worthy of your time

Get our smart take on technology from the Valley and D.C. with Axios Login. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Get the inside stories

Get an insider's guide to the new White House with Axios Sneak Peek. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Axios on your phone

Get breaking news and scoops on the go with the Axios app.

Download for free.

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Denver news?

Get a daily digest of the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Des Moines news?

Get a daily digest of the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Twin Cities news?

Get a daily digest of the most important stories affecting your hometown with Axios Twin Cities

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Tampa Bay news?

Get a daily digest of the most important stories affecting your hometown with Axios Tampa Bay

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Charlotte news?

Get a daily digest of the most important stories affecting your hometown with Axios Charlotte

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sign up for Axios NW Arkansas

Stay up-to-date on the most important and interesting stories affecting NW Arkansas, authored by local reporters

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Illustration: Rebecca Zisser/Axios

HUD recently proposed a rule that would protect financial institutions from liability for using algorithms to make lending decisions, as long as the technology used was produced or distributed by a recognized company.

Why it matters: AI can inadvertently rely on characteristics that include or are correlated with race, gender and socio-economic class, so under the proposed rule, financial institutions could make illegal determinations and hide behind an AI product.

The big picture: Financial institutions are increasingly using AI to detect suspicious activity, optimize portfolios, recommend strategic investments and assess creditworthiness.

  • The impact: There are factors the financial sector may use that — while not explicitly equivalent to race or gender — correlate with those characteristics and can result in discrimination.

How it works: Institutions may decide, for example, that unbanked individuals are less creditworthy, and using this factor in loan decisions could disadvantage people of color and women.

  • Nearly 17% of African Americans and 14% of Hispanic Americans are unbanked, compared to just 3% of white Americans.
  • 15% percent of unmarried female-headed family households are also unbanked.

What's happening: HUD released a proposed rule that would eliminate the disparate impact standard, which prohibits policies or procedures that result in a disproportionate adverse impact on protected groups. It would also shield financial institutions from liability that arises when they use AI-based tools from third parties, like tech companies for instance, whether or not there was knowledge of the problematic algorithm. 

  • What to watch: If the HUD rule is enacted, algorithms could obscure the reason for a credit denial.
  • But if denial notices are required to be made clear to borrowers, in compliance with the Fair Credit Reporting Act, potential homeowners may have some means of identifying illegal or inappropriate grounds for a determination, even if the financial institution is shielded from liability.

The bottom line: There are already challenges in applying anti-discrimination laws to AI-based determinations. The newly proposed HUD rule would make this considerably more difficult.

Miriam Vogel is the executive director of Equal AI, an adjunct professor at Georgetown Law and a former associate deputy attorney general at the Department of Justice.

Go deeper

Updated 6 mins ago - Sports

Olympics dashboard

Team USA's Caeleb Dressel celebrates winning gold in the final of the men's 50m freestyle swimming event at the Tokyo 2020 Olympic Gameson Sunday. Photo: Odd Andersen/AFP via Getty Images

🚨: Simone Biles won't compete in Olympic floor finals, individual vault or uneven bars

🏊: U.S. wins gold in men's 4x100-meter medley relay, earning Caeleb Dressel fifth gold

🏊‍♀️: Katie Ledecky wins gold in women's 800m freestyle

🇬🇧: Britain wins gold in first-ever Olympic mixed 4x100m medley relay

💻: Japan tests teleporting games and "remote cheering"

🏳️‍⚧️: Axios at the Olympics: Games grapple with trans athletesTrans athletes see the Tokyo Games as a watershed moment

Go deeper: Full Axios coverage

34 mins ago - Sports

Simone Biles pulls out of Olympic floor finals event

Photo: LOIC VENANCE/AFP via Getty Images

Simone Biles will not be competing in the Olympic floor exercise event to prioritize her mental well-being, USA Gymnastics announced Sunday morning local time.

What's happening: "Simone has withdrawn from the event final for floor and will make a decision on beam later this week," USA Gymnastics said in a statement. "Either way, we’re all behind you, Simone."

42 mins ago - Sports

U.S. wins gold in men's 4x100-meter medley relay

USA's Ryan Murphy (L) and USA's Caeleb Dressel celebrate winning the final of the men's 4x100m medley relay swimming event during the Tokyo 2020 Olympic Games at the Tokyo Aquatics Centre in Tokyo on Sunday. Photo: Odd Andersen/AFP via Getty Images

Team USA win the gold medal in the men's 4x100-meter medley relay, setting a new world record in the process on Sunday morning local time.

Driving the news: American Caeleb Dressel won his fifth Tokyo Games gold medal during the event.