Chopra knows the makings of an economic crisis when he sees one. And Chopra — a top consumer protection watchdog under Joe Biden who was ousted by Donald Trump — thinks the current administration is ill-prepared to handle the fallout of a possible AI bubble.

“We are not prepared at the federal level to deal with it,” Chopra said in an interview with Decoded by POLITICO. “I really question whether they have a game plan in place if these assumptions [about AI’s continued growth] do not pan out.”Chopra is a fixture of progressive economic policy circles, and he’d likely be in the mix for a prominent role in a future Democratic administration if the party retakes power in 2028. He’s currently working as California’s top financial and consumer protection watchdog for Gov. Gavin Newsom — a likely 2028 contender.

Meanwhile, Wall Street has been rattled by the volume of unusual, often interconnected financing arrangements that have supported AI’s rapid development. Those concerns have stoked fears that an AI-driven investment bubble could push the economy into a slump.

The financing of the AI investment boom and the speed at which the technology’s become ingrained in the economy are also spooking the veteran regulator and former Federal Trade Commission member.

“We are starting to see parts of the market crack a little bit,” Chopra said. “Where is the risk hidden in the system? And how will we respond to addressing the potential downsides of a fallout?”Now, Chopra says that he’ll use his authority as California’s top banking and securities regulator to “kick the tires” on AI-related risks to the system.

That perch can “help provide a little bit of insight into what the hell is going on,” he added. Trump’s regulators are ignoring those risks, he said, “and to the extent there is systemic malfeasance, we're going to try and stop that.”On Wednesday, Treasury Secretary Scott Bessent told CNBC that a recent credit crunch for certain AI-related companies isn’t “problematic at all.”The White House sent a link to Bessent’s remarks when asked for comment.

Tech and financial services companies will be keeping a close eye on his agenda as the first secretary of the state’s new Business and Consumer Services Agency.

It’s a powerful role. Newsom tasked Chopra with overseeing state agencies that govern everything from banking and accounting to cannabis sales and horse races. That provides Chopra a lane to probe AI-related threats to the financial system. But it also gives him visibility into the risks consumers might face as more companies use the technology to engage customers or run their business. And Chopra has a reputation for maximizing his authority.

The Sen. Elizabeth Warren (D-Mass.) protege regularly clashed with banks and tech companies during his tenure at the Consumer Financial Protection Bureau. Former Chair of the Federal Deposit Insurance Corporation Jelena McWilliams accused him of participating in a “hostile takeover” of the agency, shortly after joining its board.

When it comes to regulating AI, California has laws on the books that mirror “many of the federal prohibitions and sometimes actually go even further,” Chopra said. He’s taken a keen interest in how AI agents are being deployed — particularly in the context of banking and finance — and his agency is “not just focusing on low-level fraud.”Chopra’s comments about the risks posed by the AI investment surge come as more Democrats raise alarms about the possibility of a financial bubble.

Warren on Wednesday published a letter to Anthropic CEO Dario Amodei, warning that the company’s pending initial public offering — which is expected to be the largest in history — “could further escalate both public safety and systemic financial risks.”Jennifer Harris, a former economic adviser to Biden who’s now a director at the Hewlett Foundation, recently opined that the AI boom is “eerily reminiscent” of the run-up to the financial crisis.

And voters are taking note. An October survey released by the think tank Center for Shared AI Prosperity, covered exclusively in Decoded by POLITICO last week, found that Americans believe the AI boom is an investment bubble by almost a 2-to-1 margin.

“Many in the market feel we have no choice but for it to work out,” Chopra said. “But at some point, we will see whether those hypotheses about revenue and growth come together. And if they don't, that's where you start seeing a pretty significant ripple effect across the economy.”And while Chopra says he’s focused on his new job in California — he made a point of talking up his work to elevate state-level consumer protection regimes during his final days at the CFPB — he also signaled a willingness to return to Washington if called upon.

“When there is a meltdown or a breakdown, I tend to run toward it rather than away from it,” he said. “There needs to be a squad that is willing to actually fix it.”

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