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Back in the 1990s, the founder of TPG, David Bonderman, sold once-troubled American Savings Bank to Washington Mutual, Inc. (NYSE: WM) for a big profit. In addition to the big bucks, he was rewarded with a seat on the board. So when Bonderman structured a $7 billion capital raise for the company in April, it seemed like a sign that the smart money had some keen insight, right?

However, in today's wacky market, nothing seems to work out. TPG's investment price was $8.75 per share. Keep in mind that this was a 33% discount to the current market price (there were also warrants to purchase 57.1 million more shares at $10.06 each).

What's more, TPG was savvy enough to negotiate a juicy anti-dilution clause; that is, if Wamu's stock price fell, the fund would get more shares.

The problem: with the current plunge in Wamu's stock to $2.12 per share, there will be a deluge of more shares to hit the market.

Well, according to a piece in The New York Times, it looks like TPG is going to forgo the antidilution clause -- assuming the company needs to raise more capital, which seems like a good bet. Unfortunately, this is yet another sign of the rapid deterioration of the financial sector – and how the so-called "smart money" can get things very wrong.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He is also the founder of BizEquity, a valuation website

Back in the 1980s, David Bonderman was the chief dealmaker for Robert Bass, a Texan billionaire. He helped to structure the $550 million buyout of American Savings and Loan Association of California, which was caught in the S&L morass. It was a complex deal, requiring lots of negotiations with federal regulators. But it ultimately turned out to be a great investment. In fact, the bank became a vehicle to finance other deals.

Well, Bonderman is coming back to the future. Now, as the chief of TPG, he's one of the top players in private equity. And he wants to do some finance deals. To this end, he's raising $7 billion for a financial service fund. The investments will range from minority stakes to control situations.

Actually, Bonderman has already been busy with bank deals. For example, he recently assembled the $7 billion equity infusion for Washington Mutual (NYSE: WM). He also approached Merrill Lynch (NYSE: MER) to do an investment, which, so far, hasn't gone anywhere.

Yet, there are many financial institutions that need cash. Moreover, having TPG as a partner is usually a good thing.

As should be no surprise, it looks like TPG is getting traction on the capital raise, with commitments from the New Jersey State Investment Council and the government of Singapore.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

David Bonderman, a founding partner of TPG Capital (formerly the Texas Pacific Group), recently stated that he has no immediate plans to take his firm public. However, he did indicate that virtually all of the major private equity firms will probably be public companies within five years. If that's the case, he hopes TPG will be one of the last to go that route.

"Being public is not my favorite thing," Bonderman said in an interview with Reuters. Indeed, it is odd that aggressive investors who profit largely by taking public companies private would want to go public. Bonderman said that is a "delicious irony" that the Blackstone Group (NYSE: BX), among others, went public even as it continued taking other firms private.

So why do private equity firms go public? The answer is simple: it's where the money is. Going public allows investment firms to gain access to massive -- and liquid -- capital markets. Of course, it also provides GDP-sized payout to the principals. But as Blackstone has shown, it doesn't necessarily mean that the firms suddenly have to become more transparent. As Malon Wilkus, the CEO of American Capital Strategies, states in this interview with The Wall Street Journal, "The management company doesn't have to provide much transparency about the individual investments at all. They probably don't have to give details on the returns of the funds." And if the reporting requirements that come with being publicly traded companies prove to be too onerous, the firms can always profit by doing what they do best: they can take themselves private once again.

Ok, if you bought shares of The Blackstone Group LP (NYSE: BX) for $38, you probably don't like the firm's leader, Stephen Schwarzman. Or, if you pay ordinary tax rates, you probably have some distaste. Oh, what if you got a pink slip from a company that Blackstone purchased?

I think it's a good bet that Schwarzman's popularity rating is dicey.

Yet, in the deal world, he should be in the Hall of Fame. In fact, in this Sunday's NY Times, Andrew Ross Sorkin has a piece that defends the controversial financier.

According to Sorkin, he thinks it was inevitable that we would learn about the shadowy world of private equity. So why not now?

What's more, Sorkin says that Schwarzman is not the only dealmaker who likes to spend money on luxury and parties. For example, he points to TPG's David Bonderman, who hired the the Rolling Stones for his birthday bash.

Of course, Schwarzman was smart enough to realize that there was a big opportunity to take lots of money off the table – and, as a result, make it more difficult for his competitors to do the same.

More importantly, Schwarzman has assembled a top-notch team and racked up stellar returns.

Basically, he is no different from any other top financier, which is probably why he has lots and lots of detractors.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.