Private Credit Is in Turmoil–and Could Be in Your Future 401(k)

Summary

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Podcast Summary: WSJ What’s News – "Private Credit Is in Turmoil—and Could Be in Your Future 401(k)"

Date: March 30, 2026
Host: Alex Osola (The Wall Street Journal)
Guests: Ann Tergison (WSJ Retirement Reporter), Imani Moise (What’s News Markets Host), Berber Jin (WSJ Tech Reporter)

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Episode Overview

This episode explores the growing turmoil in private credit markets, ongoing regulatory pushes to bring private credit into Americans’ retirement accounts, and the risks and debates surrounding this shift. It also touches on market reactions to geopolitical events and industry-moving tech news, providing context for recent financial and business events that could shape investor decisions and retirement portfolios.

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Key Discussion Points & Insights

Federal Reserve’s Response to Energy Shocks

• Jerome Powell (at Harvard): The Federal Reserve is unlikely to immediately adjust interest rates in response to recent oil shocks stemming from the war in Iran.
  • "Monetary policy works with long and variable lags, famously, and so by the time the effects of a tightening in monetary policy take effect, you know, the oil price shock is probably long gone.” — Mark Carney quoting Powell, [01:17-01:30]
• Big Picture: The Fed is taking a “wait and see” approach, focusing on long-term inflation expectations rather than making quick moves.

Turmoil in Private Credit Markets and 401(k) Implications

Private Credit Fund Exposure & Reporting Issues

• Private credit firms are under pressure due to exposure to software companies, which face uncertainty in the AI era.
• New WSJ analysis shows four major funds have more exposure to software than their filings suggest, often categorizing software companies under other sectors to minimize perceived concentration risk.
  • “Blue Owl's credit fund categorized 47 software-focused companies in unrelated buckets like education or transportation.” — Alex Osola, [01:30-02:33]
• Executives downplay these risks, calling recent turbulence an “overreaction.”

Regulatory Shift: Private Credit in Your 401(k)

• Imani Moise interviews Ann Tergison on a new Trump administration rule proposal to ease 401(k) access to private market funds.
• Regulatory Context:
  • Historically, 401(k)s could access alternative investments, but legal risk (fear of litigation) made plan sponsors wary.
  • The new proposal spells out a “safe harbor,” potentially shielding employers from lawsuits if they follow specific vetting processes.
  • “President Trump this summer issued an executive order instructing regulators to make it easier for employers to add alternative investments to 401k plans.” — Ann Tergison, [02:55]
  • “What's new here is that the Labor Department provides sort of a legal framework that spells out for employers...steps that they need to take to adequately vet these investments...” — Ann Tergison, [02:55-03:48]

Proponents’ Views

• Private investments have been limited to elite investors (pensions, endowments, wealthy).
• With fewer public companies, private offerings are seen as essential to giving retirement investors access to a “growing slice of the economy.”
  • “These private investments have long been available to elite investors...So they're just saying that 401k investors also deserve the option...” — Ann Tergison, [03:53-04:20]

Critics’ Concerns & Fiduciary Responsibilities

• Critics (plaintiffs’ attorneys, consumer advocacy groups) dislike restricting litigation and cite:
  • Opaqueness, illiquidity, high fees
  • Risk that investors will be stuck with underperforming assets
  • Need for stronger guardrails; fiduciary duty remains front and center
  • “They argue that these are illiquid, often opaque investments and that they have higher fees...” — Ann Tergison, [04:25-05:27]
  • “The Treasury Department has expressed some concern....wanted some kind of guardrails in there.” — Ann Tergison, [04:25-05:27]

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Market & Business Headlines

Oil, Stocks, and International Affairs

• Ongoing US-Iran conflict is causing widespread attacks and surging oil prices:
  • Brent crude near $113/barrel; US gas prices up 30% in a month.
  • President Trump: “...in discussions with a, quote, new and more reasonable regime to end the operation. He threatened to destroy Iranian energy sites if no deal is reached.” — Alex Osola, [06:20]
  • Tehran denies talks; market expects continued instability.
• Markets:
  • Dow slightly up, Nasdaq and S&P slightly down, Nasdaq leading losses.
• Auto industry: GM to boost production at Flint, Michigan plant—despite high gas prices, demand for trucks remains steady.

Corporate News: Air Canada CEO Steps Down

• Michael Russo (CEO) resigned amid backlash for addressing a fatal crash only in English.
  • “I'm very disappointed in, as others are, rightly so, in this unilingual message of of the CEO of Air Canada.” — Canadian Prime Minister Mark Carney, [07:54]
• French language capability now a priority in selecting the new CEO.

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Technology Spotlight

OpenAI’s Sora Project and Strategic Shift

• Sora hyped as a “ChatGPT moment” for AI in creative spaces—allowed users to create AI-powered videos starring themselves and friends.
  • “He really felt like this could have been a ChatGPT moment for the creative space.” — Berber Jin on Sam Altman, [00:34, 09:18]
• Despite strong investor demand (including Disney), OpenAI decided to shut Sora down:
  • OpenAI is pivoting toward monetizing enterprise and developer productivity tools—where rival Anthropic has an edge.
  • Sora was “computationally intensive” and did not fit OpenAI’s push to maximize enterprise business.
  • “OpenAI just decided that they couldn't really afford to keep Sora alive because they're in this precarious moment where they have to devote as many computing resources as possible towards winning that coding and enterprise business.” — Berber Jin, [09:18-10:28]
• OpenAI plans a public offering later in the year, putting even more pressure on rapid revenue growth.

Tech Employee Compensation

• VC-backed startup software engineer salaries are up 25% since 2022, with median offers at $200,000; total comp rose 18%.

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Notable Quotes

• Mark Carney quoting Jerome Powell:
  “Monetary policy works with long and variable lags, famously, and so by the time the effects of a tightening in monetary policy take effect, you know, the oil price shock is probably long gone.”
  — [01:17]

• Ann Tergison on regulatory changes:
  “What's new here is that the Labor Department provides sort of a legal framework that spells out for employers how they can add private investments and other alternatives to their plans, steps that they need to take to adequately vet these investments to qualify for what they're saying should be a safe harbor...”
  — [02:55-03:48]

• Ann Tergison on private markets access:
  “They're just saying that 401k investors also deserve the option to have access to a growing slice of the economy.”
  — [03:53-04:20]

• Prime Minister Mark Carney on Air Canada CEO:
  “I'm very disappointed in, as others are, rightly so, in this unilingual message of of the CEO of Air Canada. It doesn't matter the circumstances, but particularly in these circumstances, lack of judgment and lack of compassion.”
  — [07:54-08:13]

• Berber Jin on Sora:
  “He really felt like this could have been a ChatGPT moment for the creative space...But OpenAI is preparing to go public later this year. They need to grow their revenue very quickly...the easiest and fastest way to make money in AI right now is to sell productivity tools to businesses and to developers...Sora really just, it no longer made sense within the kind of strategic roadmap of OpenAI...”
  — [09:18-10:28]

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Timestamps of Key Segments

• Fed & Oil Shock: [00:18-01:30]
• Private Credit Turmoil Overview: [01:30-02:33]
• 401(k) Regulation Deep Dive (Moise & Tergison): [02:33-05:27]
• Markets & US-Iran Update: [06:20-07:54]
• Air Canada CEO Backlash: [07:54-08:13]
• OpenAI’s Sora Project Analysis: [09:18-10:28]

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Memorable Moments

• Sharp regulatory debate: Ann Tergison’s explanation of the legal and fiduciary minefield employers face when adding new, complex investment options to retirement plans; the contrast between widening access and protecting savers.
• Cultural controversy: Canadian Prime Minister’s stern words on language responsibility and public mourning, reflecting wider societal sensitivities.
• Tech industry pivot: The abrupt cancellation of Sora dramatically illustrates how quickly priorities shift for leading AI companies under investor scrutiny.

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Conclusion

This episode delivers a concise but comprehensive look at how financial product innovation, regulation, and turbulence in private markets could affect millions of retirement savers—juxtaposed with urgent macro events and fast-moving tech industry news. Whether evaluating the pros and cons of private credit in 401(k) plans, watching the Fed’s careful balancing act, or following the fate of big AI bets, listeners get actionable context to understand headlines that may soon affect their wallets and workplaces.

Transcript

[Harvard Business School Executive Education Announcer]

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[Alex Osola]

Chair Jerome Powell says the Fed can look past the oil shock, but maybe not forever. Plus, private credit's in turmoil and the Trump administration is trying to make it easier to add it to 401ks. And Sam Altman hyped Sora as OpenAI's next big thing.

[Berber Jin]

He really felt like this could have been a ChatGPT moment for the creative space.

[Alex Osola]

So why did it all fall apart? It's Monday, March 30th. I'm Alex Osola for the Wall Street Journal. This is the PM edition of what's News, the top headlines and business stories that move the world today. Don't expect the current market chaos to prompt a knee jerk reaction from the Fed today. Federal Reserve Chair Jerome Powell said the central bank will likely stay the course and keep rates steady despite the energy shock caused by the war in Iran. Speaking to students at Harvard University, Powell said monetary policy typically works too slowly to counteract sudden economic shocks in real time.

[Mark Carney]

Monetary policy works with long and variable lags, famously, and so by the time the effects of a tightening in monetary policy take effect, you know, the oil price shock is probably long gone.

[Alex Osola]

But he cautioned that if Americans expect significant inflation over the long term, the central bank may be forced to act. You've heard us talk about how private credit is under pressure. Firms invested in software companies, and now investors are worried about how those companies will do in an AI era. Industry executives have dismissed market turbulence as an overreaction to a few bad investments. However, a new analysis by the Journal finds that four of the largest private credit funds have more exposure to the software industry than their filings suggest. For instance, Blue Owl's credit fund categorized 47 software focused companies in unrelated buckets like education or transportation. Private credit funds say software companies that serve other sectors like healthcare, should be reported in those buckets. That's been the approach since before the recent investor anxiety around software. Our what's News and Markets host Imani Moise spoke with Wall Street Journal retirement reporter Ann Tergison about a new regulation out today from the Trump administration related to broadening the world of private credit. Imani, take it away.

[Imani Moise]

Yes, so the Labor Department proposed a rule that could make it easier for retirement accounts like 401ks to invest in private market funds. The proposal is a win for Wall street firms they want access to the huge 401k market, but comes as private credit firms report rising defaults and are limiting investors ability to withdraw their funds. And Ann joins me now to explain what this means for investors. So, Anne, what's new in this proposal?

[Ann Tergison]

So it's a little nuanced. 401k plans have always had the ability to invest in alternative investments. But because of the fear of litigation, a lot of employers who run 401 plans have really shied away from alternative investments. So President Trump this summer issued an executive order instructing regulators to to make it easier for employers to add alternative investments to 401k plans. What's new here is that the Labor Department provides sort of a legal framework that spells out for employers how they can add private investments and other alternatives to their plans, steps that they need to take to adequately vet these investments to qualify for what they're saying should be a safe harbor or sort of protection from litigation.

[Imani Moise]

So why do private fund managers say these investments should be a part of retirement accounts?

[Ann Tergison]

So, you know, they say that these private investments have long been available to elite investors like pensions and endowments and the wealthy. And they also make an argument that there are just fewer publicly traded companies to invest in now. More companies are remaining private for longer. So they're just saying that 401k investors also deserve the option to have access to a growing slice of the economy.

[Imani Moise]

And who are the biggest critics of this proposal and what's their argument against it?

[Ann Tergison]

So plaintiff's attorneys are big critics of this. They don't like the thought of having litigation restricted. But there's also consumer rights groups, and they argue that these are illiquid, often opaque investments and that they have higher fees. So that the argument that private investments are going to actually help 401k investors just doesn't hold up. And the Treasury Department has expressed some concern about certain aspects of private credit. Treasury Secretary Scott Besant was concerned that the regulations might make it easy for fund managers to just stick 401 investors with underperforming private credit investments. And so he wanted some kind of guardrails in there. 401 plans have a fiduciary obligation to vet investments. And they take that fiduciary obligation very seriously. And nothing moves quickly in the 401k world. So 401k plans are going to have to really kick the tires on these things.

[Alex Osola]

That was Journal reporter Ann Tergison speaking with Imani Moise. Coming up, where negotiations stand between the U.S. and Iran and the CEO of Air Canada is stepping down after a language backlash. That's after the break.

[Ann Tergison]

Foreign.

[Mark Carney]

What's driving the markets this week? What's on investors minds as they look ahead? Find out on the Markets podcast from Goldman Sachs. A breakdown of market moves and macro signals in 10 minutes or less. The Markets podcast from Goldman Sachs. Listen now.

[Alex Osola]

On the conflict with Iran. Attacks are spreading across energy and civilian targets. President Trump said the US Is in discussions with a, quote, new and more reasonable regime to end the operation. He threatened to destroy Iranian energy sites if no deal is reached. Tehran has denied any talks. Oil prices extended their gains today on signs that the war will continue. Brent crude, the international benchmark, settled near $113 a barrel. As for the US oil benchmark, that settled above $100 a barrel for the first time since 2022. While at the pump, US gas prices are up by more than 30% in a month. Meanwhile, US stocks waver today after last week's sell off. The Dow ended slightly higher while the Nasdaq and S and P slipped. The Nasdaq led the losses and closed down 0.7%. We're exclusively reporting that in June, General Motors will increase production at a plant in Flint, Michigan, that makes the Chevrolet Silverado and GMC Sierra pickup trucks. Interesting timing given the big run up in gas prices you just heard about. But dealers and auto executives say not much has changed in terms of demand from people buying cars and trucks. And Michael Russo, the CEO of Air Canada, is stepping down. There's been intense backlash over how he handled the recent crash at New York City's LaGuardia Airport. He shared his condolences for the two pilots who died in the collision with a video in English and not in French. Canada has two official languages, English and French. Canadian Prime Minister Mark Carney told reporters last week that companies have a responsibility to communicate in both.

[Mark Carney]

I'm very disappointed in, as others are, rightly so, in this unilingual message of of the CEO of Air Canada. It doesn't matter the circumstances, but particularly in these circumstances, lack of judgment and lack of compassion.

[Alex Osola]

Air Canada said Rousseau's retirement isn't linked to the language uproar. The airline says French language ability is one of the factors its board will consider when searching for his replacement. In the tech world, it's a good time to be an employee of an AI startup. They're flush with VC money. That, combined with a competitive market for top talent, means that salaries are heavier on cash levels. FYI, a platform for salary data, says that since 2022 median based salary offers for software engineers at VC backed startups are up by a quarter to $200,000. Total compensation, including equity, grew by a slightly smaller 18%. And what happened to Sora? OpenAI last year hyped it as the company's next big thing. After ChatGPT, it let users put themselves and their friends into AI generated videos. OpenAI had big investors for it, like Disney, but last week OpenAI abruptly decided to shut it down. Journal reporter BERBER Jinn says OpenAI's strategy shift left little room for Sora.

[Berber Jin]

So Sam Altman he always had a vision of AI reshaping popular culture, reshaping entertainment, and Sora very much fit into that. He really felt like this could have been a chatgpt moment for the creative space. But OpenAI is preparing to go public later this year. They need to grow their revenue very quickly. And what's happened in the past few months is that it's become very clear that the easiest and fastest way to make money in AI right now is to sell productivity tools to businesses and to developers. And Anthropic has really just been ahead of OpenAI. And so OpenAI is in the middle of this really big strategy shift towards catching up in building these productivity tools. And what happened was that Sora really just, it no longer made sense within the kind of strategic roadmap of OpenAI, right, because it was incredibly computationally intensive. And so OpenAI just decided that they couldn't really afford to keep Sora alive because they're in this precarious moment where they have to devote as many computing resources as possible towards winning that coding and enterprise business.

[Alex Osola]

To hear more from Berber, listen to tomorrow's episode of Tech News Briefing. And that's what's news for this Monday afternoon. Today's show is produced by Imani Moise, Pierre Vianame and Alexis Green, with supervising producer Tali Arbel. Alex I'm Alex Osoloff for the Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.

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