Fed raises emergency funding rate

The move is largely symbolic, because banks do little borrowing at the discount window.

The unanimous decision to boost the discount rate also has no effect on the more widely watched federal funds rate, which measures the rate banks charge each other for overnight loans. That rate is expected to remain between 0% and 0.25% for the foreseeable future, given the slack in the labor market and the still fragile state of the economy.

But raising the discount rate allows Federal Reserve chairman Ben Bernanke to take another small step toward normal monetary policy, after the past two-plus years were consumed in a financial firefight.

"The modifications are not expected to lead to tighter financial conditions for households and businesses and do not signal any change in the outlook for the economy or for monetary policy," the Fed said in a statement.

The Fed also shortened the term of some discount window loans and raised the minimum bid in the term auction facilities it uses to supply overnight funds to banks. Those facilities were among the many innovations Bernanke introduced since the onset of the credit crunch in mid-2007 to supply U.S. banks with funding.

As the recession deepened, the Fed moved to support the housing market by buying more than $1 trillion of mortgage-related securities. When buying those securities, the Fed credited the selling banks with reserves at the Fed. This huge sum of so-called excess reserves has led to worries that any upturn in the economy will be met with an inflationary lending spike from banks.

Bernanke has emphasized that the Fed will use multiple new tools to prevent the excess reserves from fueling inflation, including the payment of interest on reserves at the Fed and the sale of Fed assets.

But as eager as policymakers are to show that policy is on a track toward normalization -- that is, a nonzero fed funds rate and a smaller Fed balance sheet -- the process is clearly going to take time.

0:00/3:12Fed holding pattern may prove costly

The Fed suggested as much Thursday, in explaining why it may be a while before the spread between the federal funds rate and the discount rate may return to its pre-crisis level of 1 percentage point. Following Thursday's increase, the spread is now half a percentage point.

The central bank said Thursday's increase should "encourage depository institutions to rely on private funding markets for short-term credit and to use the Federal Reserve's primary credit facility only as a backup source of funds" and added that it will "assess over time whether further increases in the spread are appropriate." 

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Banks nervously await new credit card law

Late last year, JPMorgan Chase (JPM, Fortune 500), the nation's largest credit card issuer, warned it expected its credit card business to lose as much as $750 million this year as a result of the new legislation.

Executives at rival Citigroup (C, Fortune 500), which issues cards to consumers from Maine to Mexico, warned last month the revenue lost by its domestic business could tumble anywhere between $400 million and $600 million.

All told, the new law is expected to cost the industry as much as $5.5 billion in lost revenue this year and more than $50 billion through 2015, according to the credit card advisory firm R.K. Hammer.

Much of that decline, experts said, is due to the fact that issuers are severely restricted by how and when they can raise a cardholder's annual percentage rate.

Under the new law, lenders are not only prevented from raising rates on a customer's existing balance, they are also required to wait 60 days before raising rates on delinquent customers.

Hoping to compensate for some of the lost revenue, credit card companies have introduced a dizzying number of new fees and raised existing ones since the bill was signed into law last May.

0:00/2:12Credit-card reader on your phone

Regional banking giant Fifth Third (FITB, Fortune 500), for example, announced last June it would begin charging a $19 fee on accounts that were dormant for 12 months.

Such efforts may help the banks. This year, the industry is expected to generate $86.4 billion in fee revenue from consumers, according to R.K. Hammer, nearly $7.5 billion more than it earned during 2009.

"In general, card issuers have been very good about finding ways to get paid for their services," said David Long, an analyst at Chicago-based investment firm William Blair & Co.

But card issuers could also get a boost from another unlikely source: the economy.

Massive job cuts have lifted banks' credit card-related losses to historic levels in recent months as out-of-work Americans struggled to stay current on their payments.

There have been recent signs of improvement in the U.S. job market though. Just last month, the national unemployment rate fell to 9.7%, dipping below 10% for the first time in three months.

Should unemployment levels continue to decline, banks would get a much-needed break on losses they have endured for more than a year now. There are already indications this may be taking place.

Early-stage delinquency rates, a commonly relied upon indicator of future loan losses, declined or held steady at Bank of America (BAC, Fortune 500), Capital One (COF, Fortune 500) and nearly every other single major credit card issuer last month, according to monthly credit trend figures released earlier this week.

"The fact that delinquencies are coming down is a positive sign," said Scott Valentin, managing director at FBR Capital Markets.

Loan losses however are only one piece in a much larger puzzle that credit card companies have to solve as they try to reconcile the CARD Act with their current business model.

Issuers will continue to experiment with new methods aimed at reviving the profits they once enjoyed. But much of their time will also be spent assessing what consumers really want in a credit card, including whether recently instituted practices like annual fees will ultimately be palatable to cardholders.

"They are trying to customize products under the new rules," said Valentin. "It will take time."  

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4 banks fail, 20 total in 2010

Texas, Florida, Illinois and California each had one bank closed by regulators.

The largest failure of the night was La Jolla Bank, FSB of La Jolla, California. It had approximately $3.6 billion in total assets and $2.8 billion in total deposits. OneWest Bank, FSB of Pasadena, California, assumed all of the Deposits of La Jolla Bank and agreed to purchase almost all of its assets.

In Illinois, George Washington Savings Bank of Orland Park was closed by the Illinois Department of Financial Professional Regulation -- Division of Banking, which appointed the FDIC as receiver. FirstMerit Bank, National Association of Akron, Ohio, assumed George Washington Savings Bank's approximately $412.8 million in total assets and $397 million in total deposits.

The Texas bank, La Coste National Bank, in La Coste, was closed by the state's Office of the Comptroller of the Currency. The office named the Federal Deposit Insurance Corp. the receiver.

In Florida, Marco Community Bank, in Marco Island, was closed by the state's Office of Financial Regulation. The office named the FDIC the receiver.

For La Coste, the FDIC entered into a purchase and assumption agreement -- in which it transfers control of the failed bank to a healthy institution -- with Community National Bank in Hondo, Tx.

Community National will assume La Coste's $53.9 million in assets and $49.3 million in deposits.

For Marco Community, the FDIC entered into a purchase and assumption agreement with Mutual of Omaha Bank, in Omaha, Neb.

Mutual of Omaha will assume Marco Community's $119.6 million in assets and $117.1 in deposits.

Customers of the failed banks are protected, however. The FDIC covers accounts up to $250,000.

All the closed banks will reopen Saturday under their new ownership.

Customers can still access their money over the weekend by writing checks or using ATMs or debit cards, the FDIC said. Checks will continue to be processed, and borrowers should make mortgage and loan payments as usual.  

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After a layoff, become a consultant?

Dear Self-Employed: You're asking at exactly the right moment. "The trick with consulting, if you want to do it for a long-term living as opposed to just between jobs, is to keep the work coming in while you're already working," says Kate Wendleton, president of nationwide career-counseling firm the Five O'Clock Club. "Many consultants forget to market themselves until the work dries up."

She adds: "There's great comfort in being hired back by your old company -- and it's a great selling point when you approach other employers -- but to make this last, you do need to line up more clients."

With several months to go until your current assignments end, and a fair number of industry contacts already established, you have a good headstart. Your first task is to make a detailed list of the decision-makers in your field at companies that might be potential clients. "This is the hardest part," Wendleton notes. Why? "Ideally, you need between 200 and 400 of them, so you may need to do extensive research," she says.

To identify movers and shakers, do web searches and delve into the trade press in your industry, the general business press, LinkedIn, lists of industry conference attendees, your own personal network (everybody knows somebody), and any other sources you can find.

At the same time, create a brochure -- either printed, in electronic form, or both -- that tells who you are and what you do. "This should be a succinct description of your special skills and achievements, including what you accomplished at your full-time jobs," Wendleton says. Then update this brochure every quarter, swapping out old achievements for more current ones, and send it to the 200 to 400 people on your list.

"For each quarterly mailing, or e-mailing, you can expect to get 8 or 9 responses saying, 'Let's talk,'" says Wendleton. "Even if only 2 or 3 of those conversations leads to actual work, it's enough to keep you busy."

0:00/2:10Freelancers: America's new workforce

You can jumpstart that process by choosing about 20 of the most promising prospects from your contact list and requesting a meeting before you even send out your brochure. "With this select group, you should be very low-key, and be specific about what you can offer them," Wendleton says. For instance, if you notice in the trade press that a company is expanding its business in an area where you have some expertise, mention where your services might fit in.

Another surefire way to attract new business: Give speeches or teach courses. "Consultants often worry that, if they speak to local groups or teach a class at, say, the American Management Association, they'll be 'giving away the store,' but that's not how it works," says Wendleton. "If you give away valuable information, people will pay to get more of it." Of course, be sure your audience members have your brochure and contact information along with whatever other materials you hand out.

If this sounds like a lot of effort up front, it is. But once you've built a solid customer base, Wendleton notes, word gets around and "one job leads to another. You'll probably end up getting a 'real' job offer at some point -- and then you'll have to decide whether to take it."

Speaking of promoting yourself, PricewaterhouseCoopers is offering a free interactive tutorial, starting Mon. Feb. 22, on how to build a personal brand. The five-part series of online workshops, at www.pwc.tv, will cover topics like: how to craft a boffo "elevator pitch" and how to articulate your long-term career goals to interviewers. Holly Paul, PwC's head of recruiting, says the course is designed to "help students and other job seekers get hired, either here or elsewhere."

Talkback: Have you ever done freelance or consulting work? What's the best way to keep new business coming in? Tell us on Facebook, below. 

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The job application black hole

"I've been looking since September. I send out résumés and nobody answers me," said Vicki LaVista, 56, a former executive assistant who has not had any luck on the job hunt. "It's already February and I don't even have a bite," she says.

LaVista estimates she applies to about 100 positions a week on sites like CareerBuilder, Monster and Craigslist, but never receives so much as a rejection form letter.

"I'd rather get feedback than no feedback. It would be better to hear 'we hate you,'" she said.

LaVista's experience is pretty typical these days -- job seekers are feeling frustrated by the sheer lack of acknowledgement.

But what happens to all of those carefully crafted résumés?

Résumé overload

The ease of free online job sites has boosted the number of candidates applying for each opening. With hundreds, or even thousands of people competing for the same jobs,most hiring managers are inundated with candidates and many of them simply get lost in the shuffle.

"The good news is, as a job seeker you have hundreds and hundreds of jobs in front of you," said Dave Sanford, executive vice president of client services for staffing firm Winter, Wyman. "The bad news is, because everything is so out there, it's also incredibly available to everybody."

Gone are the days of the thoughtful response to a classified job posting in the newspaper, Sanford said. "Now it's so easy just to send your résumé everywhere and blast it all over the globe."

Because recruiters and hiring managers are bombarded with so many applications, there is less opportunity to send responses to everyone who applies, he explained.

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Even recruiters admit that they are unable to handle the influx of applications they receive to a single job listing.

"I posted a position for an executive administrative assistant on a Friday and came back to work on Monday and we already had 400 people that applied," said Dionna Keels, a senior corporate recruiter for a large privately-owned company in Atlanta. "I took the job down on Monday and started going through résumés."

To avoid getting overlooked, experts recommend that job seekers apply to positions for which their background and experience is a good fit and tailor their application to each posting.

"People have to think about a way to separate themselves from this pile of garbage that sits on someone's desk," said Sanford. He suggests finding out who is responsible for hiring at the company and contacting them directly or following up with a phone call.

"Sending me a message through LinkedIn helps differentiate job seekers from the mass of applicants," agreed Keels.

The screening process

To help handle the onslaught, résumé screening software or questionnaires included with applications will also filter out many online submissions before they even reach a hiring manager's inbox.

"A lot of times, when you go to apply for a job there will be a questionnaire at the beginning," Keels explained. "If you don't get 100 on those questionnaires then you've probably been screened out." She estimates that at least 50% of applicants to the jobs she posts are screened out right off the bat.

Even seemingly innocuous questions like, "are you willing to work weekends?" can take a job applicant out of contention, added Shawn Boyer, CEO of SnagAJob.com, a job search site.

Being as amenable as you can on the questionnaires and using the right keywords on your résumé will boost the chances of getting through to an actual person, the experts say.

Paul Forster, co-founder and CEO of job search site Indeed.com, recommends listing all specific skills and software instead of saying, for example, "Microsoft Office products." He also suggests using full names as well as acronyms such as "pr" and "public relations" and synonyms like accounting, accountant and accountancy.

Phantom job openings

For job seekers, timing is also key. Those who didn't apply to that position Keels posted over the weekend weren't even in the running. "We will typically go in chronological order," she explained of the review process, which means those that apply first are at an advantage. "Once we find 3-4 strong people we'll start with them."

Looking at a date that a position is posted is often a good reference point, because openings that are more than a few days old may already be filled.

On job boards, positions may be listed for 30 or 60 days even though the hire is made on day five, Boyer explained. But because of the contract "that position could still be posted for another 25 days," he said. "It's incumbent on the hiring manager to [have the post taken down] but a lot of times that doesn't happen."

0:00/2:59Striving for a real career

Alternatively, some employers post "evergreen" jobs, usually for a position with a high turnover rate, even if it's not necessarily available at that time.

And some postings are not really available at all if there's an internal candidate already slated to fill the slot. Companies will often go through the motions of advertising the job and accepting résumés, to prove they are using fair hiring practices and considering external candidates.

Then there are the postings that appear to be for real jobs but are actually scams, which have ballooned in recent years and include a disproportionate number of work-from-home offerings.

Indeed.com's Forster says job seekers should watch out for any listing that prompts you for a payment or solicits your social security number. "If you apply to a job on the company's own Web site -- that's the safest situation," he advised. 

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Job relocation ... to your living room

Guerin, 48, was laid off from her post as manger of a health care technology firm in Waltham, Mass. last February. Guerin says she was completely blind sided. "I was surprised by the layoff," she said. "I had been there almost 4 years. I didn't even have an updated résumé."

Not knowing where to begin, Guerin took the advice of others, including a career coach she hired. "I got tips wherever I could. I heard a suggestion to do three significant things a day for the job search so I tried to keep at that 5 days a week."

For example, she crafted multiples variations of her résumé to fit different types of jobs and also posted it on LinkedIn.

To keep her spirits up, Guerin said she bought herself a laptop "so I wasn't stuck at home," but could still stay on top of the job search.

Meanwhile, Guerin's career coach helped her consider other positions where her skills would be transferable or were outside her industry.

The Weston, Mass-based married mother of three even applied to jobs in other parts of the country, including at a health care technology firm in Scottsdale, Ariz. "I was trying to keep an open mind," she said. "I didn't restrict my search even though I wasn't open to relocating."

When the company called her in for an interview, Guerin agreed to fly to Scottsdale, hoping that they would be receptive to her suggestion that she telecommute.

But Guerin was skeptical, and wasn't really expecting much to come of the trip. "I was really just trying to do those three things a day, and sometimes I would really be reaching," she explained of her willingness to pursue the opportunity despite the geographical obstacle.

She spent one Friday in January meeting with the team. That's when Guerin learned that others at the company telecommuted, including a vice president who also works remotely from Boston. As long as she spent one week training in Phoenix, she could work out of her home in Massachusetts.

She was hired shortly after as a senior analyst and started in mid February integrating medical, lab and pathology records. Her new job pays more than she was making at her previous job, and gives her the luxury of working from home.

"I feel so motivated and so appreciative of the opportunity," Guerin said.

The relocation option

While many job seekers are hesitant to uproot their lives and their families by relocating, they need to be as flexible as possible if they want to find work in the current job market, says Kathy Robinson, Guerin's career coach.

"People are often very restrictive about their searches -- they only want to look at certain titles, certain geographies," Robinson explained. "What I recommend for people is questioning the assumptions they have about the job search."

Those, like Guerin, who are reluctant to move can always inquire about telecommuting and find employers who are open to that option, Robinson said.

Roughly 12% of American workers have an employer that allows them to telework at least one day a month, according to WorldatWork, and the concept is catching on. "The practice is probably much more prevalent than that," said Marcia Rhodes, a spokeswoman for the association of HR executives.

And even if a move is required, Robinson adds that exploring job opportunities in other states can open up new possibilities for job seekers that aren't available in their home city. "If there's a lot of competition in one geographical area, there may not be as much competition in another area." 

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President orders debt panel, names chairmen

"Everything's on the table. That's how this thing is going to work," the president said immediately after signing the order.

The commission must deliver a report to the president by Dec. 1 that makes recommendations for bringing annual deficits to no more than 3% of the size of the economy, as measured by gross domestic product, or GDP. Currently annual deficits for the next decade are on track to be well above that level.

The commission will also be expected to suggest ways to permanently lower the country's total debt - currently expected to hit 77% of GDP in 2020, according to the White House Budget Office.

The president formally named the two co-chairmen he has chosen for the commission: Alan Simpson, a former Republican senator from Wyoming, and Erskine Bowles, a Democrat who served as White House chief of staff under President Clinton.

He said the two men "are taking on the impossible: they're going to try to restore reason to the fiscal debate."

The commission will have 18 members. Six of them, including the co-chairmen, will be chosen by the president. Another six of them, divided evenly between the parties, will be chosen by the majority and minority leaders in the House. And six of them will be chosen by the leaders of both parties in the Senate.

It's not clear yet when the Democratic leadership will name their choices.

It was also not clear before the president signed the executive order whether House and Senate Republicans would even choose to participate.

After the President signed the order, a spokesman for Senate Minority Leader Mitch McConnell, R-Ky., told CNNMoney.com that McConnell will name three Senate Republicans to the panel. But his instructions to them will be to focus more on spending cuts than tax increases.

"After trillions in new and proposed spending, Americans know our problem is not that we tax too little, but that Washington spends too much - that should be the focus of this commission," McConnell said in a statement.

A spokesman for House Minority Leader John Boehner, R-Ohio, gave some indication that House Republicans might participate but didn't say it was confirmed.

"We still haven't heard from the president on our proposal to start cutting spending right now," the spokesman said. "That doesn't mean we won't participate in this commission, but it does indicate that Washington Democrats aren't serious yet about shutting down their spending binge."

0:00/4:25Paulson's concerns about the deficit

Earlier this month, Boehner had asked the president if he would use certain legislative procedures to ensure that the House cannot ignore White House spending cut proposals.

Deficit hawks say that the country cannot adequately address the looming fiscal shortfalls without addressing both taxes and spending.

Tough calls ahead

Since the commission is being created by presidential order and not by statute, Congress isn't legally required to vote on its recommendations. The Senate last month voted down a statutory commission which would have guaranteed that the commission's recommendations would be given an up-or-down vote in the House and Senate - no amendments, no filibuster.

Nevertheless there is a chance that recommendations from the presidential commission will be given serious consideration. Senate Majority Leader Harry Reid, D-Nev., and House Speaker Nancy Pelosi, D-Calif., have given their assurances -- in writing -- that they will bring the group's recommendations to the floor for procedural votes before the end of the year. The House will only take them up, however, if they pass the Senate first.

Voting forthe commission's recommendations will likely be a tough pill for both parties. But the idea behind a bipartisan panel is that it can give political cover to lawmakers since no recommendation can be made unless it has the support of 14 of the 18 commissioners.

Whether lawmakers choose to face the challenge of addressing the country's long-term fiscal challenges head-on is a matter of political will. So far that will has not been in evidence. It remains to be seen whether a bipartisan commission dedicated to the task can help turn that around.

"This is not a Republican or Democratic problem - this is a challenge for America," Bowles said in a White House statement announcing the commission.

Even if the panel's work can't push Congress to overcome its inertia on the issue, Simpson said, "The American people are going to know about a lot more where we are headed with an honest appraisal of our situation." 

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