WaMu Chief Warns of 'Perfect Storm'

WaMu (WM Quote) dropped 3% after CEO Kerry Killinger said at a Lehman Brothers conference in New York that the housing industry is headed for a "near perfect storm."

He said the lender, which has already boosted its provision for loan losses this year, may have to sock away an added $500 million as housing markets continue to weaken.

Elsewhere in the mortgage sector Monday, Countrywide (CFC Quote) sank 6% as news from the mortgage industry continues to get uglier.

The Calabasas, Calif., lender saw its shares drop $1.13 to $17.07 a day after Countrywide announced plans to cut as many as 12,000 jobs, slashing its workforce by 20%. The move comes just over a month after the company sharply reduced its 2007 profit forecast, citing rising defaults and delinquencies on recent loans.

Jumbo lender Thornburg Mortgage (TMA Quote) sank 3% despite a Jefferies & Co. upgrade.

WaMu's dour comments sent financial shares modestly lower across the board and offset good news out of Bear Stearns (BSC Quote), where investor Joseph Lewis disclosed he has a 7% stake in the struggling brokerage firm.

Bear rose 98 cents to $106.35.