House Democrats are seeking to prevent artificial intelligence companies and financial institutions exposed to the industry from receiving taxpayer-funded bailouts if the AI market collapses, calling for failing businesses to enter bankruptcy and executives responsible for unlawful conduct to face legal consequences.
Reps. Greg Casar of Texas and Maxine Waters of California unveiled a resolution Wednesday, October 28, 2026, urging Congress to oppose federal rescues for AI companies and financial institutions facing insolvency because of their investments in the technology.
The nonbinding measure would establish Congress's position on future AI bailouts while leaving existing federal financial assistance and bankruptcy laws intact.
The proposal comes as major technology companies commit hundreds of billions of dollars to AI infrastructure, including data centers, advanced computing equipment and long-term cloud service agreements. Lawmakers are concerned that extensive borrowing and financial ties among developers, investors and lenders could spread losses throughout the economy if anticipated revenue fails to materialize.
Waters, the ranking Democrat on the House Financial Services Committee, drew comparisons to the 2008 financial crisis, when the federal government authorized hundreds of billions of dollars in assistance to stabilize banks and other institutions.
"We cannot let history repeat itself," Waters told The American Prospect. "The American people should never again be forced to foot the bill for billionaires' reckless bets."
Under the resolution, insolvent AI companies would be expected to reorganize their debts or liquidate their assets through existing bankruptcy proceedings. Chapter 11 allows businesses to restructure their obligations while continuing operations, while Chapter 7 generally involves selling assets to repay creditors.
The lawmakers also call for civil or criminal accountability for senior executives whose unlawful conduct contributed to corporate failures, including efforts to recover profits obtained through wrongdoing. Criminal prosecution would require evidence that executives violated applicable law, such as through fraud or other illegal activities.
The measure seeks additional protections for employees, consumers and retirement funds affected by an industry downturn. Proposed responses include direct economic assistance to households, job creation programs and safeguards for retirement savings.
Casar and Waters also want greater transparency surrounding AI industry debt, infrastructure financing and financial arrangements between technology companies and their lenders. Such disclosures could provide a clearer picture of the risks carried by individual businesses and the broader financial system.
Casar, who chairs the Congressional Progressive Caucus, wants lawmakers to vote on the resolution early in the next Congress if Democrats gain control of the House, or sooner if an opportunity arises.
