Fellow BloggingStocks contributor, Aaron Katsman, and I were discussing the pros and cons of investing in high-yield bonds this morning. You know, those types of risky bonds that pay a pretty good yield in return for investors lending a risky company their hard-earned cash. Inevitably, Washington Mutual's name came up.

Is it worth the risk of default to get some juicy yield?

Dunno, but just as we were discussing the troubled lender, some news rolled out over the wires.

Washington Mutual (NYSE: WM), the largest savings and loan in the U.S., announced it's taking an investment totaling $7 billion from an investor group led by private equity firm, TPG, or Texas Pacific Group.

Well, that helps provide some stability. At least for a while.

The company also gave some indication regarding first quarter earnings and the numbers are troubling. According to the same Reuters piece, the company said it expects to report a first-quarter loss of $1.1 billion, or $1.40 per share.

In order to provide some help for loans losses, WaMu expects to set aside $3.5 billion in the quarter, saying loans it doesn't expect to be paid back should total something like $1.4 billion.

It's hard to tell how the market looks at this deal. The stock's down over 6% in early trading. There was growing concern that WaMu was going to be the first U.S. banking casualty, so this infusion must alleviate investors' concerns somewhat. On the other hand, the rumors surrounding an investment mentioned $5 billion and the fact that the investment came in at $7 billion is somewhat troubling. Have things deteriorated so much in such a short time?

This blogger is watching curiously from the sidelines.

Zack Miller is the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.