BONUS! Stoa Policy Debate: GSE Credit Model (NEG)

Resolved: The United States federal government substantially reform the use of Artificial Intelligence technology

Case Summary: The AFF plan changes the criteria used to evaluate loan applications for Government Sponsored Enterprises (GSEs).  These are also known as “Freddie Mac” (Federal Home Loan Mortgage Corporation, FHLMC) and “Fannie Mae” (Federal National Mortgage Association, FNMA).  These are government-created semi-privatized entities that buy mortgages from commercial lenders.  They repackage the loans and sell them as mortgage-backed securities.  They are immense corporations and are expected to be bailed out by the federal government if things go wrong, as they did in 2008 during the financial/housing crisis, in order to stabilize the economy and the housing market.   The federal government’s goal in establishing these agencies was to stimulate home ownership for more Americans by providing federal guarantees that mortgages would be paid if borrowers defaulted.
Status Quo uses the FICO score to evaluate loan risk, which is the commonly known “credit score” that everyone has heard of.  AFF wants them to use more advanced systems involving AI.  GSEs are already considering updating their credit scoring system, and they just need to finish studying it before the changes will be made.  And Freddie Mac is already testing AI.