Executing two search warrants on Monday, agents from the Office of the Special Inspector General for the Troubled Asset Relief Program (TARP) raided the Florida offices of Colonial BancGroup and the wholesale mortgage lender Taylor, Bean & Whitaker Mortgage. The raid follows the fizzling out of a financial deal between the two companies!

As per the information forwarded by the TARP watchdog, the raids at both the offices were carried out in tandem with the Federal Bureau of Investigation and the Inspector General for the Department of Housing and Urban Development.

Saying that warrants were sealed, a spokeswoman for the TARP watchdog refused to provide any details about the investigation undertaken against Colonial BancGroup and Taylor, Bean & Whitaker Mortgage.

Meanwhile, Colonial spokeswoman Merrie Tolbert confirmed that federal authorities had served a search warrant to the lender's South Pine Street branch in Orlando, Florida; and added that the bank was cooperating with the authorities.

Taylor Beans' mortgage department manager also confirmed the federal raid in its Ocala, Florida branch, saying: "We did get a search warrant and we're cooperating." Both Colonial and Taylor Bean had been negotiating a deal whereby Colonial would have got a $300 million capital infusion from an investors' group led by Taylor Bean. However, the deal - which would have made Colonial eligible for a $550 million federal bailout - recently fell through!