Economist Gary Smith, well-known to our readers for his articles offering realism about AI, asks, what would really happen if Sam Altman’s media magnet firm OpenAI went belly up. Not a lot, he argues at MarketWatch.

The firm is spending vastly more than it is earning, as technology consultant Jeffrey Funk noted earlier this morning. But would its failure trigger a recession like the 2008 banking crisis? From Smith:

There is a crucial difference, however, in that financial institutions are highly leveraged. At the time of the 2008 crisis, the leverage ratios were 10+ for commercial banks, 20 for AIG, and 30 to 40 for investment banks. A firm with a leverage ratio of 10-to-1 would be bankrupted by a 10% drop in the value of its assets, say from a default on 10% of its assets. An investment bank with 40-1 leverage would be bankrupted by a 2.5% drop in asset values.

Unlike banks, most Big Tech firms have little or no leverage. Those that are owed money by OpenAI would not be bankrupted by its failure.

“OpenAI isn’t too big to fail — and Big Tech would be fine with that,” November 18, 2025

Will the US government rush in to save OpenAI, as it did the banks in 2008?

Not likely, says Smith:

Another crucial difference is that in the Lehman crisis, Goldman Sachs, Citigroup, JPMorgan Chase and others were fundamentally profitable firms. Within a few years, they repaid the federal bailout funds they received, plus interest. OpenAI is not fundamentally profitable and there is no clear path to profitability that will allow it to repay the government. “Would be fine with that”

Smith suggests that, based on recent actions, Altman may be talking nicely to government though, just in case. Stay tuned.