The company also said it expects to report a first-quarter loss of $1.1 billion, or $1.40 a share. It expects to set aside $3.5 billion in the quarter for loan losses and said net charge-offs, or loans it doesn't expect to be paid back, will total $1.4 billion.

Separately, the company said it will reduce its quarterly dividend to 1 cent per share from 15 cents a share, saving $490 million of capital.

It also set plans to reduce its mortgage operations. Washington Mutual said it plans to close all its freestanding home loan offices and to stop offering home loans through brokers.

In the capital-raising, WaMu sold about 176 million shares at $8.75 each, for gross proceeds of $1.54 billion. The $8.75 price is a 33% discount to Monday's closing price of $13.15.

Washington Mutual also issued about 55,000 shares of preferred stock at a purchase price of $100,000 a share for a price of $5.5 billion. After certain approvals — including the backing of shareholders allowing the company to increase its share count — the preferred stock can be converted to common shares. The conversion price will also be $8.75 per common share.

David Bonderman, a founding partner of TPG and a director of WaMu from 1996 to 2002, will rejoin WaMu's board. Larry Kellner, the chief executive of Continental Airlines, will become a board observer, at TPG's request.

"This substantial new capital — along with the other steps we are announcing today — will position us for a return to profitability as these elevated credit costs subside," Chief Executive Kerry Killinger said.

WaMu joined more than a dozen commercial and investment banks to seek cash from outside investors in the last year, following more than $200 billion of write-downs and credit losses tied to the nation's housing and credit crisis.

Contributing: Associated Press

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