WSJ What’s News - Private Credit Is in Turmoil–and Could Be in Your Future 401(k)

Episode Date: March 30, 2026

P.M. Edition for Mar. 30. The Labor Department proposed a new rule that would make it easier to invest in private markets through 401(k)s. It comes as investors pull money from some private-credit funds. WSJ retirement reporter Anne Tergesen explains the risks. Plus, last year OpenAI hyped up its new AI video product, Sora. So why did it abruptly pull the plug last week? WSJ tech reporter Berber Jin tells us. And the CEO of Air Canada is stepping down after he offered condolences for the LaGuardia Airport crash in English and not in French. Alex Ossola hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

When West Jet first took flight in 1996, the vibes were a bit different. People thought denim on denim was peak fashion, inline skates were everywhere, and two out of three women rocked, the Rachel. While those things stayed in the 90s, one thing that hasn't is that fuzzy feeling you get when WestJet welcomes you on board. Here's to Westjetting since 96. Travel back in time with us and actually travel with us at westjet.com slash 30 years. Chair Jerome Powell says the Fed can look past the oil shock, but maybe not forever. Plus, private credits in turmoil, and the Trump administration is trying to make it easier to add it to 401Ks.

And Sam Altman hyped Sora as opening eyes next big thing. He really felt like this could have been a chat GPT moment for the creative space. So why did it all fall apart? It's Monday, March 30th. I'm Alex O'Sullough 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. 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. 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 underprivile.

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 filing suggests. For instance, Blue Owls 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 health care 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 Turgason about a new regulation out today from the Trump administration, related to broadening the world of private credit. Amani, take it away. 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 to faults

and are limiting investors' ability to withdraw their funds. Anne joins me now to explain what this means for investors. So, Anne, what's new in this proposal? 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 401K plans have really shied away from alternative investments. So, So President Trump this summer issued an executive order instructing regulators 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.

So why do private fund managers say these investments should be a part of retirement accounts? 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. And who are the biggest critics of this proposal and what's their argument against it? So plaintiffs 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, both of open. 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 Bessent was concerned that the regulations might make it easy for fund managers to just stick 401K investors with underperforming private credit investments. And so, he wanted some kind of guardrails in there. 401K 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. That was journal reporter Ann Turgason speaking with Amani 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. Okay. When I sell my business, I want the best tax and investment advice. I want to help my

kids, and I want to give back to the community. Ooh, then it's the vacation of a lifetime. I wonder if my head of office has a forever setting. An IG private wealth advisor creates the clarity you need with plans that harmonize your business, your family, and your dreams. Get financial advice that puts you at the center. Find your advisor at IGPrivatewealth.com. On the conflict with Iran, attacks are spreading across energy and civilian targets. President Trump said the U.S. 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. national benchmark settled near $113 a barrel. As for the U.S. oil benchmark, that settled above $100 a barrel for the first time since 2022. While at the pump, U.S. gas prices are up by more than 30 percent in a month. Meanwhile, U.S. stocks waver today after last week's sell-off.

The Dow ended slightly higher while the NASDAQ and S&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 and 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 Rousseau, 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. I'm very disappointed in, as others are, rightly so, in this unilingual message of the CEO of Air Canada, it doesn't matter the circumstance, but particularly in these circumstances, lack of judgment and lack of compassion. 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 Jin says OpenAI strategy shift left little room for SORA. 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 chat GPT moment for the creative space. But Open AI 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. Ananthropic has really just been ahead of Open AI. And so Open AI 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 Open AI, right? Because it was incredibly computationally intensive. And so, So openly, I just decided that they couldn't really afford to keep sore 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. 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 Bienname, and Alexis Green with supervising producer Tali Arbell.

I'm Alex O'Sullough for the Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.