Fed's Schmid: Is AI's ecosystem becoming too big to fail?

Kansas City Fed President Jeff Schmid said the Federal Reserve must assess whether the artificial intelligence industry's growing network of firms and contracts is becoming "too big to fail," raising concerns about potential systemic risks. Schmid made the remarks on Thursday, drawing parallels to the 2007-2009 financial crisis when major financial institutions required public bailouts due to their size and economic influence. He questioned how regulators can understand what's inside the AI ecosystem and whether any elements pose systemic threats. The comments come amid a rapid AI and data center build-out, with Schmid emphasizing the need to synthesize what's happening in the industry to determine if it could require government support in a crisis.