photo by: Dmitry Martirosov/Journal-World

Sheila Bair, the former chair of the Federal Deposit Insurance Corporation, speaks during an event at the Dole Institute of Politics in Lawrence on Tuesday, Oct. 27, 2026.

A former financial regulator who presided over one of the worst economic meltdowns in U.S. history said on Tuesday that she worries that another crisis may be looming — and that artificial intelligence may be the culprit.

“I think there’s a lot of instability in the financial system right now with this huge AI bubble — and anybody who says there’s no bubble is kind of not being serious with you,” said Sheila Bair, the former chair of the Federal Deposit Insurance Corporation during a talk at the Dole Institute of Politics in Lawrence.

Bair, who led the FDIC during the 2008 financial crisis under the Bush and Obama administrations, warned that because many of the leading tech companies powering AI are relying on debt, that may cause the banking system to become exposed in the assumption that AI will eventually boost growth.

She called on tech companies to slow down their AI roll-out and said investors should be more scrutinizing when issuing credit.

“Debt is always at the core of financial instability,” Bair said. “Being overly reliant on borrowed money without a proven capacity to be able to pay it off almost always is not a good financial situation.”

A Kansas native, Bair led the FDIC from 2006 to 2011 and is often credited for sounding early alarm bells about the subprime mortgage lending crisis. She was one a few rational voices during a tumultuous period that saw many Americans losing their homes and savings. Her comments on Tuesday come at a time when many are already feeling the pinch of tighter budgets, and when polls consistently rank concerns about the economy among their top two issues ahead of what many call a consequential midterm election.

photo by: Dmitry Martirosov/Journal-World

Sheila Bair, right, speaks during an event at the Dole Institute of Politics in Lawrence on Tuesday, Oct. 27, 2026. Bair served as the chair of the Federal Deposit Insurance Corporation from 2006 to 2011.

On Tuesday, Bair criticized lawmakers in Congress for not doing enough to fund entitlement programs and lower the national debt, which surpassed $40 trillion in August. Social Security, which pays benefits to nearly 75 million Americans, is projected to run out by 2032, according to the Social Security Administration, at which time funds are expected to be depleted.

“I don’t get that,” she said. “We have significant fiscal challenges and Washington seems paralyzed to do anything about it.”

Bair said the longer lawmakers wait, the harder it is going to be to close the gap. “These are serious problems and we need serious people in Washington to deal with this,” she said.

Bair also criticized the current political climate, saying it consists of too much “nastiness and volatility.” What is needed instead, she said, is professionalism and problem-solvers. She said the country’s fiscal problems are her main concern.

Bair is a University of Kansas graduate, having earned her bachelor’s and law degrees there. She began her career as counsel to U.S. Sen. Bob Dole and worked as his research director during his 1988 presidential run. In 2002, she worked at the University of Massachusetts Amherst and later returned to academia to serve as president of Washington College in Maryland when her tenure at the FDIC ended.