Senate Democrats Demand Investigation into AI Debt Risks

Senate Democrats urged Financial Stability Oversight Council ("FSOC") Chair Scott Bessent to investigate the systemic risks posed by the artificial intelligence industry's rapid accumulation of debt.

In the letter, Senators Elizabeth Warren, Richard Blumenthal, Chris Van Hollen and Tina Smith argued that Big Tech’s infrastructure spending—projected to reach nearly $3 trillion by 2028—is increasingly funded through "complex and opaque" debt markets rather than cash reserves. They highlighted a massive financing gap filled by private credit, commercial mortgage-backed securities, and off-balance-sheet special purpose vehicles. The lawmakers asserted that the sheer magnitude of investment exceeds realistic revenue projections, noting that while the sector spent $400 billion on AI buildouts in 2025, it generated only $60 billion in revenue. They warned that a default cycle could trigger a broader financial crisis given the heavy exposure of banks, pension funds, and insurance companies to this debt.

The Senators also cautioned against the "circularity" of AI spending, citing arrangements where chipmakers backstop the debt of cloud providers, masking the true level of market demand. They noted that executives are already quietly advocating for federal tax incentives and loan guarantees to "de-risk" the sector. The group requested that FSOC’s interagency AI working group partner with the Office of Financial Research to (i) compel data from non-bank institutions like private credit funds and REITs; (ii) investigate the interconnectedness of AI-related debt across the financial system; and (iii) leverage FSOC authorities to mitigate stability risks before a bubble bursts.

The Senators asked the FSOC to confirm the launch of a formal investigation by February 13, 2026.