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Warren draws ‘parallels’ between AI ‘bubble’ and financial crisis

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by Sophie Brams - 04/23/26 8:51 PM ET

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by Sophie Brams - 04/23/26 8:51 PM ET

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Sen. Elizabeth Warren (D-Mass.) warned on Thursday that investments in artificial intelligence could trigger a potential economic crash, drawing parallels to the 2008 financial crisis caused by a collapse in the housing bubble.

“The parallels to the 2008 financial crisis are striking: the reckless behavior of a few billionaires and Big Tech CEOs has turned a promising technology into a structural risk to our financial system,” Warren told attendees at a Vanderbilt Policy Accelerator event.

“We need to prepare now for a possible crash by putting in place simple structural reforms to protect American families, workers, and small businesses,” she added.

Warren also argued that AI companies have a “growing addiction to debt,” borrowing large sums of money to finance their spending on data centers, chips and other infrastructure.

“To fund their habit, these companies have turned to shadowy lenders, like private credit funds, and started using convoluted debt structures,” she said. “Giant banks are also helping finance AI companies both directly through their own loans and indirectly through lending to private credit funds that lend to AI.”

The combination “deliberately obscures both how much risk is building in the system and exactly where those risks will fall when a crash comes,” she continued.

Academics at Vanderbilt University noted in a paper last month that companies are pouring trillions of dollars into AI infrastructure, creating what they called a “math problem” in the technology economy that could ultimately lead to a market correction.

“Even as painful as a sectoral bubble bursting would be, the market correction could go beyond the narrow containment of the technology industry because of both the scale of investment and the distortive features of financial arrangements involved, causing a much deeper and widespread economic crash,” wrote Asad Ramzanali, the director of AI and Technology Policy at the Vanderbilt Policy Accelerator for Political Economy Regulation.

The paper argued that a market correction could look similar to the 2008 recession, in which millions of Americans lost their homes to foreclosure and U.S. household and nonprofit net worth fell from a peak of roughly $69 trillion in 2007 to $55 trillion in 2009.

Warren warned on Thursday that an AI industry crash “threatens our entire economy,” claiming that Americans could “see their life savings evaporate in a flash” and credit in other sectors will “dry up” if the banking sector is jeopardized.

“AI companies are aware of these risks—very aware,” she said. “Instead of reducing their borrowing, slowing their rate of growth, and cleaning up their balance sheets, they are making the classic billionaires’ move: they are quietly lining up for a handout.”

She urged Congress to “lay the groundwork for future reform,” calling for the creation of a new digital regulator to enforce antitrust, consumer protection and data privacy laws, a boost in domestic AI chip production and an end to “bailouts.”

“American families and workers cannot afford another economic catastrophe,” she said. “This time around, Congress needs to be ready with a durable reform agenda to prevent the next big crash and the courage to get it done.”

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