WaMu's Surge Rooted in Overreaction

WaMu also upped its guidance for cumulative losses "to be at the upper end of the range" it disclosed in April of $12 billion to $19 billion and said that 2008 should be the "peak year" for provisioning.

Credit deterioration in WaMu's residential mortgage portfolio has been significant as housing prices fell sharply, forcing the nation's largest thrift to raise $7.2 billion in capital from a group of institutional investors led by TPG, as well as a restructuring of the company away from mortgage broker-originated home loans.

Toscafund also disclosed in a separate filing that it owned 33.5 million shares, or 5.1%, of Sovereign Bancorp (SOV Quote).

Staff reporter Laurie Kulikowski contributed to this article.