--- title: A Fed official is asking whether AI is becoming ‘too big... description: Kansas City Fed president Jeff Schmid has raised the question of whether AI is becoming 'too big to fail,' drawing parallels to the 2008 financial crisis. With... canonical: https://daily.dev/posts/a-fed-official-is-asking-whether-ai-is-becoming-too-big-to-fail--xto5yvmt2 twitter:card: summary_large_image twitter:site: @dailydotdev og:type: website og:site_name: daily.dev og:title: A Fed official is asking whether AI is becoming ‘too big to fail’ | daily.dev og:description: Kansas City Fed president Jeff Schmid has raised the question of whether AI is becoming 'too big to fail,' drawing parallels to the 2008 financial crisis. With... og:url: https://daily.dev/posts/a-fed-official-is-asking-whether-ai-is-becoming-too-big-to-fail--xto5yvmt2 og:image: https://api.daily.dev/og/posts/xTO5yVMt2.png og:image:alt: A Fed official is asking whether AI is becoming ‘too big to fail’ og:image:width: 1200 og:image:height: 630 og:locale: en --- > ## Documentation Index > Fetch the complete documentation index at: https://daily.dev/llms.txt > Use this file to discover all available pages before exploring further. # A Fed official is asking whether AI is becoming ‘too big to fail’ **[The Next Web](https://daily.dev/sources/tnw)** · 4 min read · 0 upvotes · 0 comments ## Summary Kansas City Fed president Jeff Schmid has raised the question of whether AI is becoming 'too big to fail,' drawing parallels to the 2008 financial crisis. With Big Tech carrying nearly $2.4 trillion in AI spending commitments, much of it financed through debt and circular investment arrangements between chipmakers, cloud providers, and model developers, regulators are growing concerned about systemic risk. The Bank for International Settlements has warned an AI bust could hit credit markets as hard as 2008. Nvidia's $750bn in AI deals has already pushed its credit default swaps to record levels. While leading AI companies are genuinely profitable unlike dot-com era firms, the scale and leverage of spending means even a healthy sector could transmit shocks if sentiment turns. Schmid's comments also complicate the Fed's inflation and interest rate decisions, as AI investment drives demand for power, chips, and construction. ## Full article daily.dev links to this article rather than hosting it. 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