Warren introduces bill requiring AI exposure disclosures

Investing.com -- Senator Elizabeth Warren introduced legislation on Thursday that would require financial institutions to report their exposure to artificial intelligence companies to federal regulators.

The AI Bubble Transparency Act would mandate firms to disclose their debt and equity exposure to entities including chip makers, data centers, cloud providers and hyperscalers to the Office of Financial Research. The OFR would be required to provide this data to Congress within one year under the proposed legislation.

The bill comes as AI financing reaches record levels, with companies accessing multiple credit markets to meet capital needs. Apollo Global Management and Blackstone recently completed a $35 billion financing package for Anthropic PBC to expand its AI infrastructure, representing one of the largest private credit deals in history.

Warren urged Treasury Secretary Scott Bessent in January to investigate AI financings and their potential risks to the financial system.

"AI and Big Tech companies are increasingly reliant on shadowy forms of debt and balance sheet magic to fund their multi-trillion dollar AI buildouts," Warren said. "The AI Bubble Transparency Act will give regulators and Congress the information they need to identify risks early and protect our economy from another preventable financial crisis."

Senator Richard Blumenthal is co-sponsoring the bill. Warren and Blumenthal are in the Senate minority and cannot force a vote on the legislation.

The bill would require financial firms to submit data on credit exposure, including debt instrument type, exposure size, issuing company or counter-party, interest rate, term, and collateral. Additional borrower information such as annual revenue, income, and total debt outstanding, including off-balance sheet debt, would also be required.

The legislation would direct the Financial Stability Oversight Council to issue a public report on the findings, including an assessment of the financial system's interconnectedness with AI and the extent of indirect exposures through other ties. The FSOC would then make recommendations to member agencies and Congress to address potential financial stability risks.

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