Four US senators, led by Elizabeth Warren, are urging Treasury Secretary Scott Bessent to investigate large debt packages supporting artificial intelligence. The senators have expressed concerns about the potential risks these financing arrangements pose to the broader financial system. In a letter dated January 22, the lawmakers highlighted the increasing reliance of big technology companies on private financing partners and complex debt markets to fund the infrastructure required for AI models.
Historically, such substantial investments were financed through company profits or equity. However, the senators noted a shift towards leveraging significant sums from debt markets. They caution that AI companies, if unable to rapidly increase revenues and manage their massive debt obligations, could trigger losses for interconnected financial institutions. Senators Richard Blumenthal, Chris Van Hollen, and Tina Smith also signed the letter, supporting the call for a formal investigation by the Financial Stability Oversight Council.
The Financial Stability Oversight Council, established after the 2008 financial crisis, is being asked to launch the formal investigation. Moody’s Ratings estimates that data-centre-related investments will reach at least $US3 trillion ($4.4 trillion) over the next five years, with a substantial portion expected to be sourced from various credit markets. The senators’ request underscores their apprehension regarding the potential for AI-related debt to destabilise the financial system.
