TPG was being seriously beaten up in the City yesterday. No one had a good word to say about the American private equity group after its U-turn on backing a rescue financing of Bradford & Bingley, which is threatening to steal Northern Rock’s crown as the most haplessly managed bank in Britain.

True, TPG showed not a jot of loyalty to the stricken bank as it used a Moody’s downgrade of B&B on Thursday evening as a convenient escape hatch. True, it had been briefing as recently as Wednesday that its planned £179 million capital injection was a done deal that only required the blessing of B&B shareholders. True, its reputation was already badly dented as the group which brought Debenhams back to the stock market leaving half of the City with badly burnt fingers.

But TPG was merely displaying its credentials as an opportunistic machine interested in extracting the best returns for its investors. It was perfectly logical and perfectly legal for it to walk: the downgrade would have raised the future cost of capital for B&B. “What else would you expect from TPG?” was a traditional fund manager’s response yesterday.

The real responsibility for this shambles lies with the B&B board and its adviser Goldman Sachs for cobbling together such a wonky deal with TPG five weeks ago. There was huge pressure to get a deal done and the contract was drafted in such a rush that B&B is not even sure how the fatal clause was inserted. It was, with hindsight, a terrible error.

At the time, the whole point about snubbing the existing shareholders and offering TPG advantageous terms was that it had deep pockets, could move swiftly and would, above all else, provide immediate certainty even if conditions deteriorated.

How on earth was a clause allowed to be slipped in that gave TPG such a get-out? B&B and Goldman seem to have blundered badly. TPG, Citigroup and UBS, who wriggled out of an earlier underwriting agreement, have made mugs of them, though the latter pair appear to have made amends by now sticking with their client when they could have scarpered again. Even now, the £400 million financing is not certain. After two botched deals that have proven anything but bomb proof, it would be a brave soul to predict how this will end up. The underwriters still have a general material adverse change clause that could be invoked if the roof really caves in.

It is going to be a nailbiting summer. Because of the rules governing rights issues, it will not be until the end of August that B&B finally gets its fresh capital. That is a long time for hedge funds and other bear raiders to be plaguing the share registers and a long time in a housing market where troubles seem to be intensifying by the day.

The one silver lining is that the traditional supportive institutions are now ending up where they should have been in the first place. They have also shown they can move nimbly and decisively when they need to. Preemption rights – giving existing shareholders first dibs in any restructuring – have been restored. What a pity it needed a traumatic event to reestablish that principle.

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