Skip to main content
Non-financial boards have been closed.

Non-financial boards have been closed but will continue to be accessible in read-only form. If you're disappointed, we understand. Thank you for being an active participant in this community. We have more community features in development that we look forward to sharing soon. | The Motley Fool Community
Message Font: Serif | Sans-Serif
No. of Recommendations: 1
There is a long discussion over at Saul's of the efficacy of UPST's AI/ML and its regulatory issues. I'm not sure if it is a conundrum or a paradox or maybe something else. I am loathe to comment over there due to that boards own off topic regulations.

Currently, UPST has a sort of Good Housekeeping Seal of Approval from regulators and advocate groups with regard to fair lending. But, reading Kendi and others, I come away with the understanding that the systemic negative treatment of disadvantaged communities results in unequal outcomes. Therefore, the "system" needs overhauling. It is institutional, not personal. Taking that as a given, then the disadvantaged communities will, in the macro, have have higher loan payment risk. So no matter how community-neutral the AI/ML is superficially, the very accuracy of the risk assessment will result in unequal outcomes if the loans are aggregated at the community level. The average loan interest rate, loan amount, rejection rate will negatively impact disadvantaged communities. I don't see how, with this outcome, UPST can avoid negative regulatory actions in the longer term.

The only acceptable outcome is that everyone will need to pay higher, equal interest rates, which then negates the predictive value of the AI/ML that UPST employs. Or am I missing something? Or do we have a newly enlightened regulatory system. Or are the advocate groups not eating their own cooking?

I'm along for the UPST ride but I need to stay alert for the first crack in the narrative that UPST are the good guys, in contrast to the black hat banks.

Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.