The Dotcom Memo Sitting in Bessent's Drawer

On July 6, NOTUS obtained a draft Treasury report warning that AI shares dotcom-bubble DNA and that a downturn would ripple through private credit, data centers, chips, and utilities — completed weeks ago for Scott Bessent and Kevin Warsh but still unsigned while Bessent publicly compared the $750 billion hyperscaler buildout to the 1990s boom and told G7 leaders the only real risk is China.

What's new: Career Treasury analysts — not political appointees — likened key parts of the AI market to the dotcom bubble in a draft report obtained by NOTUS on July 6. The document has sat finished for weeks, awaiting formal approval for Bessent, Federal Reserve Chair Kevin Warsh, and federal financial regulators.

• Analysts wrote that AI firms are "more deeply entrenched in the U.S. economy than their dotcom predecessors."
• A downturn would send "shockwaves throughout the entire economic ecosystem" — through stock markets, private credit, data-center financiers, cloud providers, chipmakers, and utilities.
• The pop would likely be slower than March 2000, but companies would cut investment, investors would lose confidence, and growth would slow.

Why it landed on a shelf: Treasury's spokesperson called the findings "unvetted" and "not representative of the agency's policies or views." The official line: "Artificial intelligence will be a key driver of America's new Golden Age."

Bessent's public script points the other way.

• On June 25 at the Economic Club of New York, he praised tech giants for pouring $750 billion into AI buildout this year and favorably compared the moment to the dotcom boom.
• "Could we do at least that?" he asked. "Can we do maybe more?"
• At a recent G7 meeting, he told leaders the biggest AI risk is not safety or jobs: "The biggest risk to AI is China getting ahead of us."

The administration has never voiced similar unease in public.

Why analysts say this is worse than dotcom — and not: The report acknowledges AI leaders are more mature, profitable, and better-capitalized than Pets.com-era startups. That could blunt a crash.

But the same analysts warned investors are taking risks "so significant that much of the financial system now rests upon AI meeting expectations for productivity gains and profitability."

• AI is concentrated in a handful of firms, heavily financed through private markets, and wired together across banks, hedge funds, and creditors.
• Fewer retail investors are in AI than backed dotcom plays — meaning a sustained dip would hit institutional investors that underpin pension funds and insurance balance sheets.
• Electricity bottlenecks, supply-chain snarls, and data-center funding drying up could all choke momentum.

The Federal Reserve's May survey found financial-market participants increasingly flag AI-linked equity valuations and debt-funded data-center spending as destabilizing risks — the same concern thread Warren is pulling on Capitol Hill.

Buildout didn't pause for the memo: On July 6 — the same day NOTUS published — Anthropic signed a $19 billion, 20-year lease with bitcoin-miner-turned-AI-host TeraWulf for 401 MW of Kentucky data-center capacity. TeraWulf shares jumped roughly 15% before the open.

Wall Street is pricing the lease. Treasury isn't pricing the exposure.

• Senator Elizabeth Warren, ranking member of the Senate Banking Committee, introduced a bill last month requiring financial firms to disclose non-public AI-buildout data to Treasury.
• "AI and Big Tech companies are increasingly reliant on shadowy forms of debt and balance sheet magic to fund their multi-trillion dollar AI buildouts," Warren said.
• Earlier this year, Warren and Senate Democrats asked Treasury to demand that data and report on AI debt-bubble risks. The draft NOTUS obtained appears to be exactly that analysis — just never released.

Convina's view: Washington is running two AI policies at once: a public sprint to outbuild China, and a private memo comparing the buildout to the dotcom bust. Enterprises should assume the memo is closer to policy than the podium — career risk analysts don't write dotcom parallels for sport, and Bessent won't sign the warning because signing it would slow the very capital flow he's selling to G7 finance ministers. Locking the report in a drawer doesn't erase the leverage hiding inside data-center leases, private credit, and hyperscaler capex. It just means the first institution to blink won't be Treasury — it'll be whoever holds the next $19 billion contract when the productivity math stops adding up.