BIS closed-door meeting sends message to Wall Street: No signs of “systemic risks” from AI

On Wednesday, October 21, U.S. Treasury Secretary Besant stated at a closed-door meeting of Wall Street elites in New York that he does not believe the AI industry has any “systemic issues” and dismissed comparisons between the current AI boom and the Internet bubble.

Besant addressed hundreds of financial executives and investors at the meeting. The event was jointly organized by JPMorgan and the non-profit organization Robin Hood, with tickets starting at $7,500 and was not open to the media.

According to three attendees speaking to the UK’s Financial Times, Besant said in an interview with Bridgewater Associates CEO Nir Bar Dea: “I’m good at judging when there’s a problem in the system. I just don’t see any systemic problem.”

Besant also explicitly rejected the AI bubble theory. He further stated, “The smartest people in the world—who have 99% of their wealth bet on these companies and have built the world’s most profitable enterprises—believe in this.”

Besant’s remarks come against a backdrop of recent market volatility. Some investors are questioning whether the rally in AI stocks has gone too far and are concerned about the massive debt being issued to finance data centers and chips.

Besant also commented on the overall state of the U.S. economy, with the latter part of the conversation primarily focused on AI. He remains broadly optimistic about the benefits this cutting-edge technology will bring to the United States but also noted that data centers and AI firms are not doing a good enough job communicating this message to regular Americans.

Closed-door meeting sparks transparency controversy

The event was jointly organized by JPMorgan and the Robin Hood Foundation. Robin Hood was founded by billionaire hedge fund manager Paul Tudor Jones and focuses on poverty alleviation. Ticket prices started at $7,500, with top sponsorship packages reaching $100,000. This year marked the 14th edition of the event, which has cumulatively raised nearly $72 million. Other speakers included macro investor Stanley Druckenmiller and hedge fund manager Steve Cohen.

The meeting was not open to the media. In a strongly worded response to the Financial Times, a Treasury spokesperson said: “Besant has 35 years of experience in both the public and private financial sectors and is well aware of what constitutes significant non-public information. Everything he said at the event had previously been publicly expressed.”

The spokesperson 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 event has mostly been a closed, off-the-record forum for much of its history and has invited multiple current and former government advisers and cabinet members to attend in the past.

Former Treasury Secretary: I always insist on having the media present

The incident has raised questions about transparency regarding the Treasury Secretary’s closed-door meetings with market participants.

Former U.S. Treasury Secretary Yellen said in a media interview, “Whenever I give a speech, I always make sure the media is present.” She noted that her previous role as Fed Chair made her highly sensitive to the risks of communicating sensitive information to a selective group of market participants.

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

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

Mike Davis, founder of the conservative legal non-profit Article III Project, defended the event, saying: “This isn’t an investors’ conference, it’s a charity event. We should be encouraging government officials to attend these kinds of events.”