Labor & Employment Law Daily Wrap Up, AI NEWS—Teachers union tells Bessent it is ‘gravely concerned’ about AI economic risks, (Sep 17, 2026)

By Jonathan Anderson

Equity market concentration, growing debt loads, and circular financing patterns are among the concerns.

The American Federation of Teachers (AFT) announced that it sent a letter to Treasury Secretary Scott Bessent calling for an investigation into what the labor union described as “serious financial risks from the artificial intelligence sector’s rapid debt-laden expansion.” AFT urged Bessent, who chairs the Financial Stability Oversight Council (FSOC), to scrutinize AI-related risks to the economy, require more transparency from firms, and adopt regulatory safeguards. The union said was acting to protect its members’ pensions and retirement funds, which exceed $4 trillion.

AI concerns. The letter detailed various concerns about the potential for AI to disrupt or destabilize the economy. AFT wrote that global regulators are raising alarms about equity market concentration and valuation risk. The letter argued there is a disconnect between capital expenditures by AI firms and projected revenues from those projects. Relatedly, AFT noted that technology companies are amassing growing debt loads to fund construction of data centers. In addition, the letter cited the potential for circular financing patterns among various actors involved the AI supply chain, which “may be inflating perceived demand for AI services, making AI companies’ earnings appear healthier than they are and masking potential risks.” AFT argued that private credit has becoming increasingly prevalent to finance AI infrastructure, including data centers, chip purchases, and related capital expenditures with “limited transparency about the structures involved.”

Requested actions. The letter asked the FSOC to take several actions as part of its mandate to identify financial stability risks, promote market discipline, and address threats:

• Require data production so the FSOC can evaluate systemic financial risk from exposure to “AI-linked equities, debt and circular financing arrangements.”

• Report on such risks, including assessment of AI-related concentration, capital expenditure/revenue mismatch, and circular financing. Such reporting could also include findings and recommendations of the interagency AI working group monitoring potential risks to financial stability.

• Require accelerated disclosure from public companies and private fund sponsors about related-party revenue, backlog and financing arrangements among major AI participants.

• Enhanced capital, leverage and stress-testing rule changes that can protect against a correlated-shock scenario where a sharp AI-linked equity correction is accompanied by private credit and insurer stress.

“We are gravely concerned and call on you, in your capacity as chair, to urge the Financial Stability Oversight Council to swiftly examine and direct its member agencies to monitor and report on a cluster of interrelated risks associated with the current buildout of AI infrastructure and the financial arrangements that support it,” AFT said in the letter to Bessent.

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