Kansas City Fed President Sounds Alarm on Growing AI Industry Risks

Kansas City Federal Reserve Bank President Jeff Schmid has sounded an alarm about the growing importance of artificial intelligence (AI) in the US economy. He believes that the Federal Reserve System should assess whether the AI industry is becoming too big to fail, much like large financial institutions did during the 2007-2009 financial crisis.

Schmid pointed out that the development of AI and construction of data centers are creating a vast network of companies and contracts. He wants the Federal Reserve to determine if this ecosystem has become so significant that it could pose systemic risks to the economy.

The Kansas City Fed President referenced the financial crisis of 2007-2009, where large institutions required government support due to their scale and impact on the broader economy. Schmid emphasized the need for the Federal Reserve to understand the internal structure of this AI ecosystem and identify any potential systemic risks.