Bessent Tells Wall Street: No Systemic Risks in AI

On Wednesday, October 21, U.S. Treasury Secretary Bessent stated at a closed-door meeting of Wall Street elites in New York that he does not believe there are "systemic issues" in the AI industry, dismissing comparisons of the current AI boom to the internet bubble.

Bessent spoke to hundreds of financial executives and investors. The meeting was co-hosted by JPMorgan and the nonprofit organization Robin Hood, with tickets starting at $7,500 and closed to the media.

According to three attendees who spoke to the Financial Times, Bessent said during an interview with Bridgewater CEO Nir Bar Dea, "I’m good at judging when there are problems in the system. I don’t see systemic issues."

Bessent also explicitly rejected the notion of an AI bubble. He further stated, "The smartest people in the world—who have 99% of their wealth tied up in these companies and have built the most profitable businesses globally—believe in this."

Bessent's remarks come amid ongoing market volatility. Some investors are questioning whether the surge in AI stocks has gone too far and are concerned about the massive debt issued to finance data centers and chips.

Bessent also shared his views on the overall state of the U.S. economy, with the latter part of the dialogue focusing on AI. He expressed an overall optimistic attitude towards the benefits this cutting-edge technology will bring to the U.S., but pointed out that data centers and AI companies have not done a good job of communicating this message to ordinary Americans.

Closed-Door Meeting Sparks Transparency Controversy

The meeting was co-hosted by JPMorgan and the Robin Hood Foundation. Robin Hood was founded by billionaire hedge fund manager Paul Tudor Jones and focuses on poverty alleviation. Tickets for the meeting started at $7,500, with the highest sponsorship package reaching $100,000. This year marks the 14th edition of the event, which has raised nearly $72 million. Other speakers included macro investor Stanley Druckenmiller and hedge fund manager Steve Cohen.

The meeting was closed to the media. A Treasury spokesperson responded to the Financial Times with strong wording, stating, "Bessent has 35 years of experience in both the public and private sectors of the financial industry and knows what constitutes significant non-public information. Everything he said at the event has been previously expressed publicly."

The spokesperson also added, "The media has become so inaccurate that he can no longer read the newspapers."

Robin Hood’s Chief Communications Officer Kevin Thompson stated that the meeting has largely been a non-public forum not open to reporters throughout its history and has invited numerous current and former government advisors and cabinet members to attend.

Former Treasury Secretary: I Always Insisted on Media Presence

This incident has raised questions about the transparency of the Treasury Secretary's closed-door meetings with market participants.

Former U.S. Treasury Secretary Yellen stated in a media interview, "I always made sure the media was present when I spoke." She pointed out that her background as a former Federal Reserve Chair made her highly aware of the risks of conveying sensitive information to a limited group of market participants.

The Federal Reserve requires officials to ensure that their interactions with the public "do not provide any profit-seeking individuals or institutions with an advantage over competitors" and recommends that Federal Open Market Committee officials speak in settings where the media is present.

However, there are currently no regulations restricting the Treasury Secretary from speaking to large groups of private market participants without reporters present.

Mike Davis, founder of the conservative legal nonprofit Article III Project, defended the event, stating, "This is not an investor meeting; it’s a charity event. We should encourage government officials to attend such events."

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