WASHINGTON — The Federal Reserve’s payment rails move trillions of dollars daily. Banks told the Treasury Department those systems could be dangerously vulnerable to advanced AI models. That warning set off a chain of events inside the administration this year.
Treasury Secretary Scott Bessent did not wait for an invitation. He pushed for a deeper role in shaping artificial intelligence policy, according to sources familiar with the matter.
The move came after financial institutions laid out specific concerns about what happens when machine-learning models go wrong — or are attacked. The worry is not theoretical. Banks now use AI for fraud detection, liquidity forecasting, and other critical functions.
But as those models grow more complex, regulators fear a single cascading error could freeze the payment system. A coordinated attack could do the same.
Bessent’s intervention happened as the administration tried to balance two competing pressures. President Donald Trump has made American AI dominance a priority. But the Treasury secretary’s push reflects a growing anxiety inside the administration about the risks that come with that ambition.
The scene inside Treasury shifted. Bessent moved to insert himself into AI governance conversations that had largely been led by other agencies. The Federal Reserve has its own concerns about the security of its payment systems.
The contours of the debate are now clear: Bessent wants Treasury to have a seat at the table when AI policy is written, particularly where it touches financial stability. The warnings were specific.
Banks told the Treasury Department that the same AI systems poised to revolutionize finance could also leave the Fed’s payment rails dangerously exposed. Those rails are the plumbing that lets banks send money to one another. If that plumbing freezes, the economy freezes with it.
This is not a future problem. Financial institutions already rely on machine-learning models for daily operations.
The models are becoming more complex, and regulators are struggling to keep up. A single cascading error could ripple through the system before anyone has time to react. Bessent’s move came earlier this year.
The details of his push are still emerging. But the message from financial institutions was clear: the risks are real, and Treasury needs to be involved. The administration has not yet settled on a unified approach to AI regulation.
The debate inside the government is ongoing. Bessent’s intervention has made it clear that the Treasury Department will not sit on the sidelines while other agencies shape the rules.
The Federal Reserve has its own concerns. The security of its payment systems is a core responsibility. But the Fed is not the only agency with a stake in this fight.
Bessent has made sure Treasury will have a voice. By nightfall, the contours of the debate were clear.
Bessent wants Treasury at the table. The Federal Reserve has its own priorities. The administration is still grappling with how to regulate AI without stifling innovation.
The outcome is not yet determined.
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