Asset manager hires former E*Trade CEO Layton

* Named senior advisor, co-chair of investment committee

* E*Trade's search for CEO continues; Layton a consultant

* Online broker: Jan-Feb trading activity drops 20 pct

NEW YORK, March 17 (Reuters) - U.S. asset manager and advisory firm, NewOak Capital LLC, has hired former E*Trade Financial Corp (ETFC.O) chief executive Donald Layton as senior advisor and co-chairman of its investment committee.

NewOak said Layton -- who stepped down from the embattled online broker at the end of 2009 -- would help lead its private equity vehicle for bank recapitalization investments, and advise on other bank-related investments.

Layton remains a temporary consultant to Robert Druskin, E*Trade's interim CEO, and had also agreed to be a consultant to the company's next CEO.

E*Trade has suffered the last few years from loan losses in its mortgage portfolio, but is now starting to heal. It said last week the search for a new chief executive continues.

E*Trade shares were flat on Wednesday after it said trading activity in February was down 20 percent from January. It added that home equity portfolio loans that are 30 to 89 days delinquent -- the company's greatest exposure to loan losses -- rose 5 percent in that time. [ID:nWNAB0532] (Reporting by Jonathan Spicer; Editing by Tim Dobbyn)