WaMu shares up 29 percent on report of $5 billion infusion

SEATTLE — Washington Mutual, the country's largest savings and loan, is close to landing a $5 billion cash infusion from private equity group TPG and other investors, according to a report Monday in The Wall Street Journal.

Wall Street cheered news that WaMu may join a growing list of battered financial institutions that have secured much-needed cash since the credit crisis began last summer.

WaMu shares jumped nearly 29 percent, rising $2.94 to close at $13.11.

The investment would give TPG, formerly Texas Pacific Group, a mix of common and preferred stock, totaling less than 25 percent of WaMu's outstanding shares, according to the report. TPG would also get a seat on WaMu's board.

The investment group may also include existing WaMu institutional shareholders and other private equity groups, the Journal reported.

Washington Mutual did not respond to requests for comment.

Shares of the Seattle-based thrift have come under heavy fire as problems in the housing and credit markets have deepened. WaMu's stock shed nearly 70 percent in 2007, and the sinking value of WaMu's mortgage portfolio and soaring loan-loss provisions — the amount it socks away to cover bad loans — led to a $1.87 billion fourth-quarter loss. Executives have said fallout from the mortgage crisis would continue to slam the company's finances through 2008, and said up to $8 billion more will be needed this year to cover future loan losses.

As of Friday, WaMu's stock had fallen another 25 percent in 2008. Cuts to its credit ratings erased a brief moment of investor optimism sparked by a positive comments from Chief Executive Kerry Killinger at a Wall Street conference in January.

At the time, Killinger said WaMu had enough cash and access to loans to get through the fiscal year.

Late last year, the thrift dismantled its subprime mortgage operation, closed more than half of its home loan centers and sales offices, shut down call centers and eliminated more than 3,000 jobs. It also shuttered WaMu Capital Corp. and stopped selling mortgage-backed securities.

The company slashed its dividend and raised $2.9 billion in a December stock offering. At the time, analysts said they did not believe that was enough to carry the thrift through the fiscal year.

Despite WaMu's tough year, Killinger received $14.4 million in compensation for 2007.