Who's Afraid of the Banking Crisis?

Not Toscafund Asset Management.

Toscafund , the London hedge fund that invested in Washington Mutual Inc. in April hss bought more WaMu shares and has also bought into Sovereign Bancorp. Inc.

Toscafund, founded by Martin Hughes, owns 105.5 million shares, or 6 percent, of Seattle-based Washington Mutual, according to a filing yesterday with the SEC. The fund bought a 5.1 percent stake in Sovereign, it said in a separate filing.

WaMu rose 59 cents, or 12 percent, to close at $5.33 in New York Stock Exchange composite trading.

Given that the Fed is not now increasing the money supply, there is little chance for a quick rebound in the mortgage market. Further, any rumor that a bank is in trouble can go viral in a matter of minutes. Nothing is exempting WaMu or Sovereign from these not so pleasant facts. Thus, Toscafund either knows something we don't, or is putting riverboat gamblers to shame with these extremely aggressive bets.