Designing a FINRA for Frontier AI | Lawfare

Ah, the United States has finally discovered that governing frontier AI by way of emergency export controls and well-timed White House phone calls is rather like composing a symphony on a kazoo: technically possible, but nobody wants to hear the result. So the legal minds at Lawfare have proposed a federally supervised self-regulatory organization, a FINRA for the robot brains, to replace the ad hoc chaos. Because nothing instils confidence like copying the regulatory model that spent decades failing to notice Bernie Madoff until he turned himself in.

The article wields two choice examples of improvised governance: the Commerce Department's export controls on Anthropic's Fable 5 and the White House's pressure on OpenAI. Fable 5, one assumes, is so fearsome that it now requires a passport before leaving the laboratory, and OpenAI is so powerful that it needs a stern word from the Oval Office rather than, say, a rule. Both developers and the government reportedly agree the current approach is not working, which is the political equivalent of a couple announcing their divorce in a joint statement and then asking the same marriage counsellor for advice.

And the solution is a self-regulatory organization, which is Washington's polite way of saying 'the foxes will run the henhouse, but there will be a government clipboard on the wall.' We have seen this film before. FINRA is the financial sector's celebrated regulator, the one with a revolving door that practically needs a turnstile, and now it is being proposed as the template for technologies that make securities fraud look like a parking ticket. Still, one must admire the chutzpah: after export controls and presidential pressure failed to produce a coherent policy, the industry volunteers to regulate itself, and everyone pretends that is a fresh idea. I'd laugh, but the bar has closed, and frankly nobody in this story would notice.