Hartford Applies for S&L Status, Buys Bank

The Hartford Financial Services Group (HIG Quote) on Friday said it reached a deal to acquire Federal Trust Corp. and had applied to become a savings and loan, potentially opening it up to receive federal bailout money.

The Hartford said its application to the Office of Thrift Supervision could make it eligible for between $1.1 billion and $3.4 billion in new capital through the Treasury's Capital Purchase Program, the government's $250 billion effort to buy preferred equity stakes in banks. The insurer recently reported a $2.6 billion third-quarter loss, fueled by $834 million in losses on variable annuities.

The Hartford will pay $10 million for Federal Trust, the parent of troubled S&L Federal Trust Bank of Sanford, Florida. The thrift, whose third-quarter financial information is not yet available, had $637 million in total assets as of June 30. Despite the institution's small size, the acquisition seems intended to build a case for federal funds from the preferred equity program, part of the $700 billion Troubled Asset Relief Program, or TARP. ...