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The financial situation at WallStreet is getting from worse to catastrophic, and needless to say that all of it has already started to spill over to the main street. The Private Equity industry that gets its cash infusions from pension funds who have have burned a lot of cash in the mortgage sector, which is severely hampering their commitments to provide VCs with the promised amount funds. According to WSJ:

From pension funds to rich individuals to once-deep-pocketed financial institutions now in desperate shape, this year’s plunging markets have made it much harder for some investors to come up with the money they promised to invest in venture-capital funds…

In October, Washington Mutual Inc. skipped a $700,000 capital call from a fund called Financial Technology Ventures Fund III and was listed as a “defaulting limited partner,” according to a court filing by the Seattle company last month…

In late September, WaMu missed a $30,000 capital call to another fund, Arch Venture Fund V. The company now is trying to sell its venture-fund stakes to other investors. A WaMu spokesman declined to comment, and the outcome of Saturday’s deadline isn’t clear.

“Lawyers have said everyone should expect at least one default [from investors] in the next year,” says Bryan Roberts, a managing general partner at Venrock, a Palo Alto, Calif., venture-capital firm…

[T]he largest U.S. public pension fund, the $179.2 billion California Public Employees’ Retirement System, or Calpers, has asked private-equity firms to ease off on requests for additional capital it had previously committed to deliver…

“In all likelihood, a number of institutional investors will not honor capital calls,” predicts Cynthia Steer, a consultant at Rogerscasey. While doing so could break legal agreements, there are few precedents for venture-capital and private-equity funds suing their investors, since they need to maintain long-term relationships with the investment community.