dcxavier

Citi, Merrill, WaMu: Death Spiral Financing

The "death spiral" clause TPG inserted isn't meant to be taken at face value. What it does is give them a place at the negotiating table if further investment is required. No one is going to sink more dollars into WM if a big slug of it goes right out the door to TPG and crew. The TPG crew owns about half the bank now. If WM continues down it's current path and requires more capital, TPG may be faced with the dilemma, do they want to own 20% of a solvent bank or 50% of nothing. I'll wager on the former.