WaMu Could Get $5 Billion from Equity Firm, Others
- Apr 07, 2008
Seattle–Private-equity firm TPG, along with other investors, may invest $5 billion in Seattle-based Washington Mutual Inc., helping the largest U.S. savings and loan rebound from the national mortgage crisis, The Wall Street Journal reported Sunday.However, the injection of new capital could weaken WaMu shareholder investments. Over the past year, shareholders have lost 74 percent of their investment.WaMu used subprime mortgages to gain large profits during the housing boom; although the effect of the subprime crisis on large banks and brokerages has received a considerable amount of press, WaMu’s issues reflect the subprime fallout’s effect on main street banks, according to the Journal.However, it is unclear if $5 billion will be enough to make up for all WaMu’s future capital requirements—particularly if the mortgage-backed-securities market keeps declining. WaMu has been deeply affected by securities problems and was exposed to some of the most troubled housing markets in the U.S., including California and Florida.