February 9: This week in AI federal policy

DC/ai Decoded: A weekly newsletter on developments in artificial intelligence and quantum federal policy

This week decoded

In addition to developing a comprehensive national AI regulatory framework, the White House is also drafting an AI security policy framework aimed at helping organizations better identify and manage risks associated with AI systems.

Treasury Secretary Scott Bessent testified before the Senate Banking and House Financial Services Committees that the Financial Stability Oversight Council is prioritizing the responsible integration of artificial intelligence to enhance financial stability while closely monitoring emerging AI-related risks. At the same time, several Federal Reserve Governors emphasized the Fed’s growing focus on AI’s broader implications for the labor market, productivity, and the overall economy.

Read more below

Congress

Hearings

Last week

• On February 3, the House Education and the Workforce Health, Employment, Labor, and Pensions Subcommittee held a hearing on “Building an AI-Ready America: Adopting AI at Work.”

• On February 4, the Senate Commerce, Science and Transportation Committee held a hearing on “Hit the Road, Mac: The Future of Self-Driving Cars.”

This week

• There are no relevant hearings scheduled this week.

Legislation

• Sens. Cory Booker (D-NJ), Mike Rounds (R-SD), and Martin Heinrich (D-NM) and Reps. Ted Lieu (D-CA) and Jay Obernolte (R-CA) reintroduced the AI Grand Challenges Act to direct the National Science Foundation to establish an AI Grand Challenges Program and administer prize competitions to incentivize researchers, entrepreneurs, and innovators to harness AI to address specific and measurable challenges to benefit the United States and serve the public good. (Text)

• Reps. Rob Menendez (D-NJ) and August Pfluger (R-TX) introduced the AI for Secure Networks Act to direct the federal government to examine how AI can be responsibly used to strengthen the security and resilience of telecommunications networks. (Text)

• Reps. Jennifer McClellan (D-VA), Jay Obernolte (R-CA), and Rep. Bob Latta (R-OH) introduced the National Commission on Robotics Act to establish a national commission tasked with evaluating the United States’ competitiveness in robotics and providing policy recommendations to strengthen American leadership in this critical technology sector. (Press Release)

• Reps. Bill Foster (D-IL) and Pete Sessions (R-TX) introduced the Stop Identity Fraud and Identity Theft Act to establish a government-wide approach to addressing vulnerabilities in online identity verification in financial services. (Text)

• Sens. Elizabeth Warren (D-MA), Andy Kim (D-NJ), Elissa Slotkin (D-MI), and Chris Van Hollen (D-MD) introduced a resolution “condemning and calling for the reversal of President Trump’s decision to allow the export of advanced artificial intelligence chips to the United Arab Emirates, despite significant risks to national security and just months after the United Arab Emirates signed a secret $500,000,000 deal to buy close to a majority stake in the Trump family crypto company World Liberty Financial.” (Text)

• Reps. Rashida Tlaib (D-MI), Pramila Jayapal (D-WA), and Delia Ramirez (D-IL) introduced the Defund the Oligarchs, Fund the People Resolution. The press release said, “The legislation calls for an end to the political and economic dominance of billionaire oligarchs… As wealth concentrates, our democracy becomes less responsive to the needs of everyday people, and necessities like housing and health care have become unaffordable. Campaign contributions allow ultra-rich oligarchs and corporations to purchase influence, winning tax breaks for the oil and gas industry, unrestricted development of artificial intelligence, and industry-friendly crypto legislation.” (Press release)

Correspondence

• Sen. Maggie Hassan (D-NH) sent a letter to bondu, a company that makes interactive AI toys for children, requesting information on its data security practices following a report about a security vulnerability that resulted in the public exposure of bondu users’ personal information. (Letter)

• House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party (CCP) Ranking Member Ro Khanna (D-CA) sent a letter to World Liberty Financial (WLF) requesting information on the reported $500 million investment deal with United Arab Emirates (UAE) Royal Family member Sheikh Tahnoon bin Zayed Al Nahyan and potential influence on the diversion of advanced artificial intelligence chips to China from the UAE. The letter also seeks information from World Liberty Financial about its facilitation of a $2 billion investment in a cryptocurrency exchange founded in China by Changpeng Zhao, recently pardoned by President Trump. Khanna sent a related letter to Benjamin Wallace, United States Attorney for the District of Delaware. (WLF Letter)(Wallace letter)

Publications, Meetings, and Events

• Chairman of the House Committee on Energy and Commerce Brett Guthrie (R-KY) published an essay in the Orrin G. Hatch Foundation’s 2025 Hatch Center Policy Review on “Dominance, Deployment, and Safeguards: The Path for American AI Leadership,” saying, “What makes this moment unique is the pending threat to America’s leadership in artificial intelligence (AI) technology by the People’s Republic of China (PRC) and Chinese Communist Party (CCP)–backed companies, many of which have developed advanced technologies nearly at parity with that of American AI companies. Knowing that the AI revolution will define economic growth and global competitiveness for the next century, the United States must choose to innovate. The stakes couldn’t be higher. China already deploys next-generation technologies to advance many of the regime’s most sinister goals focused on enhancing the power of its Orwellian surveillance state utilizing advanced computing. Even more concerning to the American public is the threat of an adversary’s technology stack serving as the building blocks for future advancements or as a strategic chokehold. For example, we have unfortunately learned this lesson the hard way through Chinese bottlenecks related to telecommunications equipment and critical mineral mining and processing.” (Essay)

Trump Administration

White House

• The White House Office of the National Cyber Director, with the Office of Science and Technology Policy, is developing an AI security policy framework to help organizations manage risks that affect how their AI systems function. National Cyber Director Sean Cairncross said the President “is very forward leaning on the innovation side of AI. We are working to ensure that security is not viewed as a friction point for innovation.” (NextGov)

U.S. Commission on Civil Rights

• On February 24, the Commission on Civil Rights holds a meeting on artificial intelligence and its application in voting administration.

Noteworthy Quotes and Events

ADMINISTRATION

Treasury Department

• Treasury Secretary Scott Bessent testified before the Senate Banking Committee and House Financial Services Committee that the Financial Stability Oversight Council “is prioritizing the responsible use of artificial intelligence to strengthen financial stability. The council is working with public and private sector partners, including international counterparts, to enhance system resilience while closely monitoring emerging risk.” (Remarks)

Federal Reserve

• In remarks on Economic Outlook and Supply-Side (Dis)Inflation Dynamics, Fed Vice Chair Philip Jefferson said, “…data through the third quarter and the readings on spending we have received for the fourth quarter suggest that domestic demand held up well last year. It was supported by strong consumer spending and business investment, including investment in artificial intelligence (AI), which could support productivity growth. For 2026, I have revised up my growth forecast modestly in recent weeks, informed by signs of the economy’s continued resilience. Now, I expect the economy to grow at a rate similar to last year’s estimated rate of 2.2 percent.” (Remarks)

• Fed Governor Lisa Cook delivered remarks on the Economic Outlook, saying, “Looking ahead, as I have discussed in several speeches, I see the continued proliferation of artificial intelligence (AI) as likely to have a significant effect on the labor market and the economy. Growing evidence shows that AI has the power to significantly boost productivity. Better productivity gains would support economic output and allow real wages to increase. I also see AI accelerating the generation of ideas, which could lead to the creation of new products, businesses, and jobs. Nonetheless, I am aware that job destruction may precede job creation, such that the unemployment rate might rise as the economy transitions, causing hardship for many workers and their families. I am concerned that there is a dynamic inconsistency problem such that there could be a mismatch between the arrival of costs related to AI investment and the arrival of benefits, including higher productivity that is noninflationary.” (Remarks)

CONGRESS

Senate Banking FSOC Hearing Q&A

Sen. Mike Rounds (R-SD)

• Sen. Mike Rounds (R-SD): “The FSOC 2025 Annual Report recommends that its member agencies use the council’s artificial intelligence working group to identify regulatory impediments to the responsible adoption of AI by financial institutions from your perspective, what are the biggest impediments today that prevent banks from adopting AI responsibly, especially for compliance, fraud detection and risk management?”

  • Treasury Secretary Scott Bessent: “Well, as you know, AI is an exciting and new technology, and there’s a great amount of learning to do here, so FSOC treasury, the regulatory agencies, are working with our private partners to implement in a gradual way, robust usage of AI. AI can be a great tool, but AI, we have to also think that AI can be a risk through state and non-state actors. So, it is a public private partnership, and we are pushing very hard across the agencies and at Treasury.”

• Rounds: “FSOC’s report also recognizes that overly complex and subjective supervision, like reliance on vague concepts such as reputational risk, as you mentioned in your opening statement, restricts valuable activities given FSOC’s push for clearer standards and responsible AI adoption would a time limited AI sandbox for financial institutions with clear guardrails help firms test AI tools in a controlled setting while regulators evaluate risks and benefits.”

  • Bessent: “Senator that is clearly the one very interesting option, and we are considering that moving forward, we’d be happy to work with your staff on that.”

Sen. Mark Warner (D-VA)

• Sen. Mark Warner (D-VA): “Agentic, AI. We got to come back and talk about agentic. AI. Huge possibilities with AI, but we’ve got to be careful about that.”

House Financial Services FSOC Hearing Q&A

Rep. French Hill (R-AR)

• Rep. French Hill (R-AR): “Mr. Secretary I appreciate members on the Republican side allowing you to clarify points on some key discussions back and forth. And we have had some good ones today. There was an exchange you had with my friend from Massachusetts, Mr. Lynch, about artificial intelligence and in your capacity as Chair of FSOC, our view here is that artificial intelligence offers great promise for better consumer service, fighting fraud, more accuracy in providing customer service, but also in providing a more robust compliance process with the rules in banking and the brokerage and securities industry, I wonder if you could talk from an FSOC point of view about a philosophy of overseeing artificial intelligence, both in the financial services industry and among the supervisors of the financial services industry, yes.”

  • Treasury Secretary Scott Bessent: “So again, we are working with our private sector partners to best practices. And Chairman as you said, there are two pieces to this. There is service improvement, which we are, for instance, working on at the IRS. We hope to be able to use artificial intelligence there to get customer weight down and service down on the other side, both financial security, alerting everyone to the risk of what is going on, but this is a transformative change. And as I mentioned to the Congressman, we look forward to working with you on legislation to make sure that the technology does not move too far ahead of the legislation.”

Rep. Stephen Lynch (D-MA)

• Rep. Stephen Lynch (D-MA): “I just want to do a comparison of the FSOC reports. Let’s go back to 2024 and then we’ll talk about the current report. In the previous report, the members of FSOC expressed serious concerns about related to potential risk to financial stability, regarding the lack of explainability and high complexity of AI and the approaches that have a potential to heighten financial instability, especially in the areas of bias and discrimination and credit decisions that was in 2024 your report in 2025 focuses on removing regulatory impediments. So, in 2024 we were concerned about consumer protections, and now, under your leadership, we’re concerned with eliminating regulatory impediments, the dangers. And that was a that was a report during a time where the Chairman and I were Co-chairs of an AI Task Force, those dangers haven’t gone away. In reality, those dangers are still as severe for the American consumer, but they are absent from FSOC report. So, it’s obvious you’ve eliminated or dropped that priority as an issue for FSOC. So can you explain the change from protecting this to consumer and now eliminating regulations?”

  • Treasury Secretary Scott Bessent: “We are charged with financial stability, and we are focused on leveraging AI strength and the financial system resilience, but with economic growth and a security lens.”

• Lynch: “On the issue of explainability, how when people apply for credit and are denied, we don’t have the ability for AI to explain why they were denied. Is that? Is that a concern? I mean, we are talking about the trust within the financial services.”

  • Bessent: “It could be a concern, but we don’t view it as a priority for financial stability.”

• Lynch: “That that’s the truth. That’s the truth, OK.”

Outlook for Comprehensive AI Legislation

• Rep. Ted Lieu (D-CA) said, “The White House has led the industry astray, down a bad path. Steve Scalise is very opposed to any kind of legislation at the federal level. … And that’s now resulted in three things the tech industry wanted to avoid, which is, backlash from the public, backlash from bipartisan members of Congress and multiple states regulating their industry.” (Politico)

• Rep. John Gottheimer (D-NJ) said, “I think Republicans have certainly ceded the turf.” (Politico)

• House Judiciary Chair Jim Jordan (R-OH) said, “I don’t know about moving anything, but we’re definitely talking about AI.” (Politico)

• On his developing bill, Rep. Jay Obernolte (R-CA) said, “Were going to be continuing to monitor AI as it matures, and create a framework that is flexible enough to change and capture these new trends when come online.” (Broadband Breakfast)

Miscellaneous

• Sen. Bernie Sanders (I-VT) issued a press statement saying, “Artificial intelligence and robotics will transform the world. Today, a handful of billionaires in Silicon Valley are making decisions behind closed doors that will shape the future of humanity. Meanwhile, working people have no voice in these discussions, and far too little visibility into the rapid changes already underway. That is why I look forward to visiting California this month to meet with AI leaders and to ask the fundamental questions we need to be asking as a country.” (Press release)

• Regarding his AI Overwatch Act, Sen. Jim Banks (R-IN) said, “Chairman Mast is doing great work and we’re having a lot of conversations about working together.” (Punchbowl)

• Rep. Pete Sessions (R-TX) posted “I introduced bipartisan legislation with RepBillFoster to combat the growing threat of identity fraud and theft. The Stop Identity Fraud and Identity Theft Act strengthens digital identity security, protects taxpayers and consumers, and supports states as they seek to develop additional identity verification methods.”

• Rep. Bill Foster (D-IL) posted “I am proud to introduce this bipartisan legislation with Congressman PeteSessions to protect Americans’ personal information. It is important that Congress responds to the growing wave of identity theft and fraud by giving states the tools to strengthen their digital identity infrastructure.”

• Sen. Richard Blumenthal (D-CT) posted “Profligate Big Tech must bear the societal costs of its skyrocketing AI spending—rising costs of electricity, water, construction, & much more. Companies not consumers should pay. Bipartisan legislation must impose accountability. I’m working on it.”

• Sen. Chris Murphy (D-CT) posted “The AI industry is driving up our electricity prices and ruining our landscapes with these huge data centers not to cure cancer but to do this.”

• Murphy also posted “Twitter’s AI bot is trained with many disturbing instructions like: ‘You’re always a little horny and aren’t afraid to go full Literotica.’ This is what the AI industry is building. It turns out they aren’t curing cancer or solving our energy crisis.”

• Sen. Ed Markey (D-MA) posted “Anthropic has announced that Claude will remain ad-free. I’m glad to see AnthropicAI agrees that ads in AI chatbots can pose serious risks to its users. That’s why I opened an investigation into AI chatbots’ advertising plans. Companies must put consumers first.”

• Sen. Tom Cotton (R-AR) posted “If students from Communist China want to study at our colleges and universities they should be studying the Federalist Papers, not biotechnology and AI.”

• Rep. Greg Landsman (D-OH) posted “With AI data centers, you’re either with big tech or our towns. We need every public official to be with us, not them. They’re fine. They have billions. Our towns need us.”

• Rep. Suzanne Bonamici (D-OR) posted “AI is reshaping the workforce faster than we can respond. I am developing a comprehensive, human-centered framework for AI that will strengthen teaching and learning, prepare workers, and address security and privacy concerns. And I’ve introduced the No Robot Bosses Act to keep humans in the hiring process.”

• Rep. Rob Menendez (D-NJ) posted “AI is being used more & more by hackers to carry out sophisticated cyberattacks on our devices & networks. That’s why I introduced legislation to make sure we’re also using AI to strengthen cybersecurity & protect Americans from foreign threats.”

• Sen. Maggie Hassan (D-NH) posted “I’m very concerned by reports that the maker of a children’s AI chat toy publicly exposed its users’ personal information. As children’s toys become more sophisticated, companies need to do everything they can to protect the safety and privacy of our kids.”

• Rep. Abe Hamadeh (R-AZ) posted “Congressman Hamadeh’s new legislation, the Improving Emerging Tech Opportunities for Veterans Act, aims to connect highly skilled veterans with high-tech jobs, especially as AZ-08 emerges as a hub for semiconductor manufacturing and AI innovation.”

• Hamadeh also posted “’So many people are scared of AI and new technology because they see it as replacing jobs. But I think this is an ability to give veterans high-paying jobs, especially when it’s these foreign direct investments coming into the United States.’”

• Rep. Tim Sheehy (D-MT) posted “A sober take on AI, which is a tool, not a master. AI will create jobs we haven’t even imagined yet. Let’s not let the hysteria drive the narrative.”

What I’m Reading This Week

• Global AI Law and Policy Tracker: Highlights and Takeaways, Will Simpson, IAPP.

• Why AI adoption keeps outrunning governance — and what to do about it, Pat Brans, Computerworld.

• Move Fast, but Obey the Rules: China’s Vision for Dominating A.I., Meaghan Tobin and Xinyun Wu, The New York Times.

• Inside Musk’s Bet to Hook Users That Turned Grok into a Porn Generator, The Washington Post.

About Zero One Strategies

Zero One Strategies is a specialized government relations practice dedicated to navigating the complex landscape of U.S. federal policy in emerging technologies. As advancements in technology continue to outpace regulatory frameworks, Zero One Strategies aims to provide strategic guidance and bipartisan advocacy for innovators and businesses operating at the forefront of technological development.

The practice focuses on key areas such as artificial intelligence, digital assets, blockchain, decentralized technologies, cybersecurity, data, and digital infrastructure, as well as the multiple policy issues impacting these sectors, including tax and financial services.

Contact us at Stacey@ZeroOneStrategies.com