Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

TARP watchdog raids 2 banks

Special inspector general overseeing bailout targets bank in Florida that failed to secure federal funds.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Jennifer Liberto, CNNMoney.com senior writer

Bailout tracker
Follow the money: Bailout tracker
The government is engaged in a far-reaching - and expensive - effort to rescue the economy. Here's how you can keep tabs on the bailouts. More

WASHINGTON (CNNMoney.com) -- Federal agents in Florida on Monday raided two banks that last week scuttled a deal that would have qualified one of them for federal bailout funds.

The agents were acting on search warrants issued by the office of Neil Barofsky, the special inspector general for the Troubled Asset Relief Program.

The Montgomery, Ala-based parent of Colonial Bank, Colonial BancGroup Inc. (CNB), had a deal in the works to get a $300 million capital infusion from the smaller Ocala, Fla.-based mortgage lender Taylor, Bean & Whitaker. The deal would have made it possible for the Alabama bank to become eligible for a $550 million federal bailout.

However, the Alabama bank announced Friday that the deal was off as it released dismal quarterly financial results.

The failed deal led the bank to express "substantial doubt about Colonial's ability to continue," the bank said in a press Friday.

It's unclear exactly what Barofsky is investigating. By law, he is charged with investigating fraud and other misconduct related to TARP.

His agency announced last month that it had launched 35 criminal and civil investigations into a range of allegations from accounting and securities fraud to insider trading and public corruption.

Kristine Belisle, a spokeswoman for the inspector general's office, said that agents "executed two search warrants today in the state of Florida." She declined to elaborate, citing the pending investigation.

Colonial Bank spokeswoman Merrie Tolbert confirmed that one of the bank's branch in Orlando had been searched by federal agents, but she declined to provide further details. She said the bank is cooperating.

"The search warrant has no impact on our day-to-day retail commercial banking operations," Tolbert said.

Calls to Taylor, Bean and Whitaker seeking comment were not returned Monday. To top of page

Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
Your degree will earn you the most from these colleges Art majors can make big bucks, too. Find out which school has the highest paid grads in your major. More
10 most expensive cars sold at Pebble Beach auctions When cars are sold where the wealthiest car collectors gather, prices can go sky high. More
Top boutique hotels for business travelers These are some of the top boutique hotels used by business travelers, according to data from Booking.com. More
Sponsors
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play