Institute Strong Firewalls That Avert Financial Risks

Data centers are increasingly financed through complex, opaque, and highly leveraged deals. Banks, insurance companies, private credit funds, real estate investment trusts (REITs), pensions, mutual funds, and retail investors are increasingly exposed to risk and could suffer significant losses in the event of a market downturn.1 Federal policymakers should establish financial safeguards to prevent pension funds and other important institutional investors from acquiring or retaining exposure to speculative securities linked to data center infrastructure. Such safeguards might include mandated divestment (i.e., requiring pension funds to divest from securities whose underlying collateral depends on data centers), heightened fiduciary duties for the administrators of pension plans or the managers of other investment portfolios, or more stringent transparency and exposure reporting requirements.

  1. Warren et al., Letter to Secretary Scott Bessent Re AI Debt, U.S. Senate Committee on Banking, Housing, and Urban Affairs. ↩︎