How to Unlock your iPhone 3G

David Murphy

Jan 2, 2009 7:29 am

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Apple iPhone 3G

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The iPhone world has been clamoring for this one for awhile. And what better way to start the new year then by playing around with the Dev Team's newest creation--an official unlock for the iPhone 3G. We'll run through the basics of this wonderful little tool and show you exactly how you can jailbreak and unlock your phone. You'll be able to run as many third-party applications as you want on your device. And more importantly, you'll be able to use your iPhone on any cell phone carrier you want.

What's an Unlock?

Unlocking your phone allows you to use it on any carrier you want, not just AT&T. You'll pop out your AT&T SIM card and insert the SIM card of a different carrier. The iPhone doesn't allow you to do this normally, so a little bit of hacking is involved.

Is it safe? Will I break my iPhone?

Possibly. There's always the worry that the unlocking process will royally screw up your phone--but the only way to deal with that is to read the situations of others who have attempted the procedure before you. As long as you follow the instructions closely, you will greatly reduce your chances of bricking (screwing up) your iPhone. Beyond that, once you've unlocked your iPhone, you'll want to approach new iPhone updates with suspicion. Don't just click "update" in iTunes--wait for the various iPhone hackers to release (and safely test) new tools that will allow you to redo the same procedure on the new firmware.

Is it easy to do? Hacking an iPhone sounds difficult!

It is. It used to be difficult, but a number of one-button (or two-button) programs have emerged that greatly simplify the process of doing evil things to your iPhone. Don't worry. Even a cat could unlock an iPhone at this point.

How do I do it?

If you want a picture step-by-step, this link will walk you through the 3G unlock. But for the most part, unlocking a 3G iPhone is easy enough that we'll just need a few steps to tell you how to do it. Here we go!

1) Upgrade your iPhone to the 2.2 Firmware

This one's easy. Fire up iTunes and update your phone to the latest update, 2.2. If you've already done this, then you are one step ahead of the game. If not, you accomplish this task by clicking the "Update" button. Magic! Be sure to backup/sync your phone prior to doing so, and write down any note, programs, or settings you want to keep!

2) Pwn your Phone

Download Quickpwn. This is the application you'll use to jailbreak your phone prior to unlocking.

Connect your iPhone to your PC all USB-style and fire up Quickpwn. The program is as self-explanatory as a jailbreaking application could be. Select your phone. Select your phone's firmware (which should appear naturally, as you did the update through iTunes. If not, download it here). Install Cydia or Installer (we prefer the former). Follow the directions. Enjoy a hot cup of tea while you wait.

3) Install the application repositories

If you opted to install Cydia, fire up the application on your newly jailbroken iPhone and add the following application repository: http://apt9.yellowsn0w.com/

If you went for Installer, add this repository: http://i.yellowsn0w.com/

If you have no idea how to add a repository, fiddle around in each application's settings and options menus. It'll be there, trust us.

4) Install yellowsn0w

Use either Cydia or Installer to install yellowsn0w. Once the server finally lets you do so (it's getting hammered right now), run the application. Then turn off your iPhone. Grab a paper-clip and follow these instructions to pop out your SIM card. Slap in the SIM card from the new carrier you want to use. Turn on your iPhone. If the carrier doesn't pop up after a bit of a wait, repeat the process to remove the SIM and try doing it again.

5) Crazy Troubleshooting

Switching to T-Mobile? Turn off 3G on your iPhone settings (under Networking) before switching SIM cards.

Turn off any PINs on your SIM card before making the switch.

Make sure you're using the latest version of yellowsn0w. It should update in the Cydia/Installer menus automatically, but you can always make sure that the available version matches the newly released version by hitting up the official Dev Team blog.

We'll be monitoring the 3G unlock all day, and we'll let you know if we come across anything else! And you can always leave comments about the success / destruction of your iPhone 3G below.

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Next-Gen iPhone Photos Leaked? Judge for Yourself

Ian Paul, PC World

Feb 13, 2009 7:34 pm

Photos of what appears to be the back casing of an updated Apple iPhone have surfaced. From what can be deciphered from the photo, this alleged new model iPhone may come in black, might be contoured and textured to give you a better grip, and apparently has a matte finish. The supposed first shot of this new iPhone model (shown below) features just the bottom of the back casing and comes via the Apple sleuths at iPod Observer. The site claims it obtained images from an anonymous source in China. Not long after iPod Observer posted its image, the site MacRumors came out with a few more that fit with iPod Observer's "leak."

I am tempted to treat these rumors as being a little more credible than usual. You may recall that iPod Observer called it when the iPhone switched from a satin nickel finish to a glossy black plastic back.

However, I have to say, "who the hell cares?" I mean really, what have we learned from these photos? Now we know that Apple may or may not release an updated iPhone this year, which isn't much of a shocker. We also know that if a new iPhone shows up that one of the models will be black. Yawn.

We also know that it will have a new model number (A1303, if you must know), which obviously means, well, the new model will have a new model number. The back also appears to have some ridges and textured, possibly to give the iPhone a non-slip grip. That's nice, but not a particularly big selling feature.

What we really want to know is what will be inside the new iPhone. The photos depict a 16GB iPhone, but what about a 32GB model? Could this be the much anticipated and often rumored $99 iPhone we've been hearing about? What about more features or a faster processor? Anything? Anything at all? Nope, just some photos of a shell that may be the real deal or may just be some Photoshop magic.

Now, I know what you're asking, "why are you showing us these photos if you think they're so lame?" Well, that's simple; I love iPhone rumors. Don't you?

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MacBooks Could See Custom Four-finger Gestures

You find such interesting things when you dig through the dark recesses of your file structure: hopes, dreams, ancient artifacts of great power, and even the occasional piece of unimplemented software. A blogger over at MyAppleGuide discovered, secreted away in OS X's Trackpad pane, an interface that would allow users of multitouch-capable trackpads--such as those on the new MacBooks and MacBook Pros--to define their own four-finger gestures.

The file's a .nib, which just means that it's simply the interface part of the equation--there's no code hooked up to it. But I've verified it for myself, and if you have a multitouch-capable Mac, you can find the same file at /System/Library/PreferencePanes/Trackpad.prefPane/Contents/Resources/ English.lproj/FourFingerSwipeGesture.nib (whew).

Currently, the multitouch trackpad's four-finger gestures are hard-coded: up shows the desktop, down triggers Expose, and swiping horizontally brings up the Application Switcher. The unused interface would have allowed for several other functions, including switching between Spaces and opening Dashboard.

Personally, I'd love the opportunity to remap these gestures. When I first started using the new MacBook, I constantly wanted to swipe up for expose, and down for showing the desktop, and while I've largely retrained myself at this point, I still almost never use the side-to-side application switching gesture, preferring instead to go for the keyboard equivalent of command-tab.

So, it looks like the configurable gestures may be coming in a future update, although perhaps Apple decided not to go in this direction just to keep it all standardized. My hope is for the former.

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Convert Your iTunes Purchases to MP3s

Rick Broida

Jan 8, 2009 9:14 am

As you've probably heard by now, Apple just announced plans to ditch DRM for good. That means all songs you purchase from iTunes will arrive on your PC without the usual copy-protection shackles.

However, this doesn't give you carte blanche. Because Apple still encodes songs using the proprietary AAC format, your downloads won't play in many phones, PDAs, MP3 players, and so on.

Fortunately, it's fairly easy to convert iTunes Plus purchases (i.e. the DRM-free versions of songs) to the universally compatible MP3 format. Here's how.

1. In iTunes, go to Edit, Preferences, General.
2. Click the Import Settings button.
3. Change the Import Using option to MP3 Encoder.
4. In the Setting field, choose Custom, and then set Stereo Bit Rate to your desired setting (I recommend 256 kbps or 320 kbps).
5. Click OK three times to exit the various windows.

Now you're all set to convert any iTunes Plus download to the MP3 format. To do that, right-click the song and choose Create MP3 Version. Wait a minute or so and presto: iTunes plops an MP3 copy of the song into your library.

Note that you'll have now both versions of the song in your library, so you'll have to do a little housekeeping.

The bigger downside is that converting from AAC to MP3 necessarily involves some loss of audio fidelity. Not much, but if you're a purist, you may want to skip iTunes altogether and buy MP3s outright from a store like AmazonMP3.

Update: AAC is not, in fact, a proprietary format. Sorry for the mistake!

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Question of Control Over Banks Awaits Treasury Secretary at Group of 7 Meeting

By LANDON THOMAS Jr.

Published: February 12, 2009

LONDON — When Treasury Secretary Timothy F. Geithner arrives in Rome for the first official meeting with his Group of 7 counterparts, he will be a bit of an outlier.

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British officials are pushing the Royal Bank of Scotland to pare bonuses and increase lending to homeowners and businesses.

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Times Topics: Credit Crisis -- The Essentials

Ireland injected 7 billion euros into its two largest banks Wednesday. In return, it gained the right to appoint four directors, limit executive pay, set lending parameters, require the suspension of home foreclosures, as well as an option to buy a 25 percent equity stake at fire sale prices some time in the future. The government already owns 75 percent of Anglo Irish bank.

In Britain, four of the country’s most troubled financial institutions — two of them were officially nationalized — are already under the de facto control of a newly formed government holding company.

Officials are pushing Lloyds Bank and the Royal Bank of Scotland, among others, to pare bonuses and increase lending to British homeowners and businesses.

Both countries’ actions conform to a growing sense in Europe that the best way to revive banks is to put them on the tightest possible leash. But in an interview in advance of the Friday and Saturday G-7 meetings, a senior Treasury official reiterated that the Obama administration is committed to the proposition that banks must remain in private hands.

“We are not seeking control of financial institutions,” he said. “We are seeking to restructure them.”

Other countries are confronting similar challenges to the United States in different ways.

To be sure, government control of banks in Britain and Ireland are more a result of the desperate times for financial institutions in those countries than bold insight on the part of policy makers. But with this mix of investment and influence, these governments are, however reluctantly, overcoming the bugaboo of nationalization even as they steer clear of the term and its negative associations.

“The N word is a difficult word,” said Richard Portes, an economist at London Business School. “But you need to exercise control in order to get bad assets off the books. The question is, both in the U.K. and the U.S.: What degree of control?”

The market capitalization of the top American banks is collectively below $500 billion, and the International Monetary Fund is estimating that financial write-downs will rise to $2.2 trillion. As a result, a number of analysts say, the Obama administration will be forced to concede that even with recent capital injections, some large banks may become insolvent.

With the full force of the international spotlight focused on Mr. Geithner this weekend, he is facing increased pressure not only to add meat to the skeletal outline of his bank plan, but to demonstrate to a skittish global economy that the Obama administration is ready to take charge.

“There is a vacuum to be filled,” said Morris Goldstein, a policy analyst at the Peterson Institute for International Economics in Washington. “The United States, as the largest global player, needs to lead the show.”

The Irish plan, the most recent policy salvo from a government that has been under withering pressure to address the sick condition of its banks, may provide some guidance. But it is no panacea, either.

“Injecting the first 7 billion euros is a de facto nationalization,” said Brian Lucey, a finance professor at Trinity College Dublin. “And nationalization of the whole Irish banking system is a strong probability.”

Unlike banks in Europe and the United States, Irish banks were not great originators or holders of securitized mortgage assets. But they lent with abandon to residential and commercial property owners and now face a rising tide of nonperforming loans.

According to the terms of the recapitalization, the Irish government will receive preferential shares paying 8 percent interest and a warrant to take a 25 percent stake in the banks in five years, at today’s low prices. That would allow the Irish taxpayer to profit from any improvement in the bank’s value.

That could be a long wait. Write-downs of Irish banks will be significant. Bank of Ireland, warned on Thursday that it would report a loss for the second half of this year and estimated bad loan charges of 4.5 billion euros through 2011. Allied Irish Banks is expected to write off a similar figure.

Such a figure dwarfs the companies’ respective market valuations — 600 million euros for Bank of Ireland and about 1 billion for Allied Irish, a reflection of the extreme pessimism in the market.

Both banks have equity capital ratios of about 6 percent, in line with other major European banks.

In Britain, the home lenders Northern Rock and Bradford & Bingley are fully nationalized, but the government’s control of R.B.S. and Lloyds is less overt, though its influence, by most accounts, is just as strongly felt.

UK Financial Investments is pushing R.B.S., for example, to be a more aggressive local lender. And as the uproar over bonuses has grown here, the body has worked closely with its hand-picked chief executive, Stephen Hester, to cut back on payouts.

The G-7 meeting will mostly be an opportunity for finance ministers to compare notes on the global crisis and their differing solutions. But for Mr. Geithner, it will also be an opportunity to explain the Obama administration’s plan.

“Coming to the exam unprepared is unacceptable,” said Ed Yardeni, an independent market analyst.

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Uh Oh, Apple Fans: Looks Like Obama Uses a PC

JR Raphael, PC World

Feb 12, 2009 5:35 am

President Barack Obama may be busy drumming up support for his economic stimulus package, but reading between the lines of the president's recent remarks reveals some interesting new nuggets about his computing choices. All right, I'll just say it: Obama's a PC guy.

Hey, it may not be the most important piece of info within the administration right now. But after the back-and-forth debate over Obama's MP3 player allegiance (contrary to original rumors, it turned out our commander in chief rocks it iPod-style), then the brouhaha about his secretive and supersecure BlackBerry-style device (believed by many to be a military-grade machine called the Sectera Edge), there's no denying interest is high in President Obama's preferences for technology. The guy may hope to unite political parties, but when it comes to the world of tech, Obama's quickly learning the sides are as divided as ever.

Intelligence From Intel

Past reports have suggested Obama was a Mac fan (or, at the very least, his campaign staff members were). It now appears, though, the president has taken the PC pledge. The John Hodgman-friendly factoid slipped out in a simple utterance by Intel CEO Paul Otellini, buried within a story by PC World sister publication Computerworld. The statement discusses Obama's support for Intel's decision to invest billions in upgrading its factories:

"Otellini said Obama called him last night to congratulate him on company's decision. The president 'reminded me that he sees the Intel logo every morning when he opens up his laptop; I was pleased to hear that,' he noted."

Exhibit A: "He sees the Intel logo every morning." (Okay, it's the only exhibit. But I've always wanted to say "Exhibit A," and this seemed like a good opportunity.) Now, many Apple products do use Intel chips, right? Mac systems, though -- as the sharp folks over at All Things Digital, who first noticed the sure-to-be-contentious quote, point out -- don't flash the logo around in the way that PCs do. So, even if it's just a result of the White House's Windows system stockpile, it looks like the leader of the free world is likely a man of Microsoft.

Time to update your scorecards, then: The current presidential tech standings are one Mac (for the iPod), one PC (for the laptop). Convince Apple to build Obama an NSA-approved iPhone, and we just might see a majority rule.

For what it's worth, by the way, President Bush sported both an iPod and a PowerBook. Crikey...can't we all just get along?

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Stimulus Bill Would Bestow New Aid to Many Workers

Marcio Jose Sanchez/Associated Press

Unemployed people wait in San Jose, Calif., to talk to a state employment worker on a hotline.

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By CATHERINE RAMPELL

Published: February 13, 2009

Many part-time, low-income and female workers who have lost their jobs stand to benefit from the federal stimulus bill.

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Stimulus Plan Receives Final Approval in Congress (February 14, 2009)

Stimulus Plan Sets New Limits on Executive Pay (February 14, 2009)

Times Topics: Economic Stimulus | Unemployment

Under the legislation, approved by Congress on Friday, not only would workers who already receive unemployment benefits get some additional money in their checks, but also many workers who have fallen through the cracks could soon be brought into the system. About 500,000 more people could become eligible for benefits, according to the National Employment Law Project.

Each state has its own criteria for who is eligible to receive benefits and how much. But under the stimulus bill, the federal government would offer a $7 billion carrot to states that cover certain categories of workers, like part-timers and people in training programs. A few states, like New York, are already generous with these eligibility guidelines, and others — eager to get federal assistance — are likely to expand their coverage in coming months.

While the vast majority of workers contribute directly or indirectly to the unemployment insurance pot, just 36 percent of people who are out of work actually collect such benefits, according to the Department of Labor.

The percentage is low primarily because large categories of workers do not qualify under the states’ rules. Workers must have lost their jobs involuntarily, for example, and most states do not grant benefits to people who are looking only for part-time work.

Labor groups across the country have been lobbying for expanded unemployment insurance coverage for decades. Many states raised their eligibility requirements in the 1980s, partly because their finances had been depleted by a deep recession in the 1970s, and partly because of a national sentiment that, as President Ronald Reagan put it, unemployment benefits were merely “a prepaid vacation for freeloaders.”

To encourage states to cover more workers, the new stimulus bill offers money in two lumps.

States are eligible for the first installment if the time period they use to determine eligibility includes a worker’s recent earnings. (Most states use slightly older pay data from practices before the days of computers.) The change is expected to help more low-wage workers and women, who cycle in and out of the labor force more frequently than others.

The remaining incentives, two-thirds of the stimulus money, go to states that broaden their eligibility requirements.

To qualify, states must provide benefits to people in at least two of these four situations: those who are looking only for part-time work; people who left their jobs for “compelling family reasons” (like a child’s illness or domestic abuse); people who request extra financing for dependents who qualify for benefits; and workers who had previously exhausted benefits and are now in training programs.

These categories primarily help women, who represent about two-thirds of the part-time work force and are more often primary caregivers.

At least four states — Maine, New Jersey, New Mexico and New York — already meet all the requirements, according to the law project. Nineteen states would qualify for just the first third of the funding. Others meet some of the requirements.

California, for example, already provides benefits to many more workers that other states, but because it uses older pay data, it does not yet qualify for the approximately $900 million in incentive money that it might otherwise receive. The state’s legislative bodies are now considering a bill to change this.

Many state legislatures have been discussing expanded coverage and could move quickly for the federal financing.

Oregon’s state legislators, for example, have considered making more people eligible for several years but found it prohibitively expensive, according to the state’s employment department director, Laurie Warner.

She said the recession, the new ability to collect more recent pay data and a desire to cover more low-wage earners have reignited support from the governor and many legislators. The stimulus money does not hurt, either.

The costs of expanded eligibility would quickly exhaust the federal incentives, however. If the Legislature passes all three unemployment bills the governor supports — two of which are not strictly required by the federal stimulus bill — the $90 million Oregon expects to receive in federal incentive dollars will probably last no more than three years, she said.

After that, to maintain broader coverage, employers would have to pay higher payroll taxes. The Oregon payroll tax for the state’s unemployment insurance trust fund averages 1.97 percent of pay; if finances run low, the highest level under current law is 3.08 percent, she said.

Some businesses and interest groups have opposed the provisions because of the possible long-term effects on state budgets and tax rates.

“This is coming at a time when many states are borrowing heavily because they already have solvency questions with their funds,” said Douglas J. Holmes, president of UWC-Strategic Services on Unemployment and Workers’ Compensation and formerly with the Ohio bureau of employment services. “They are now placed in a position of making a policy decision guided not by long-term policy considerations but by short-term emergency need.”

Proponents of the legislation point out that states can restrict benefits if the new eligibility requirements become burdensome.

“Nobody has any doubt they’ll be back in there when the recession is over to try to crank benefits down again,” said Representative Jim McDermott, a Democratic from Washington State who sponsored the original legislation upon which the unemployment provisions were based.

“But right now we have a serious crisis in the country, and to get states to modernize is in the workers’ best interest.”

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Awaiting Bailout, Several Big Banks Halt Foreclosures

By THE ASSOCIATED PRESS

Published: February 13, 2009

WASHINGTON (AP) — Several big banks, including JPMorgan Chase and Citigroup, are expanding efforts to halt home foreclosures while the Obama administration develops a plan to help struggling homeowners.

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The White House said President Obama would outline his plan to spend at least $50 billion to prevent foreclosures in a speech on Wednesday in Arizona, one of the states hardest hit by the foreclosure crisis.

“It’s not intended to be measured by one day’s market scorekeeping, but instead to ensure that the 10,000 Americans each day that have their homes foreclosed on — and the millions more that are barely getting by — are protected,” the White House press secretary, Robert Gibbs, said Friday.

Treasury Secretary Timothy F. Geithner announced a revised effort to stabilize the financial system on Tuesday. It included outlines of a foreclosure relief effort.

Although lenders have bolstered their efforts to aid borrowers over the last year, their action has not kept up with the worst housing recession in decades.

More than 2.3 million homeowners faced foreclosure proceedings last year, an 81 percent increase from 2007, and industry analysts say that number could soar as high as 10 million in the coming years, depending on the severity of the recession.

JPMorgan Chase, Morgan Stanley and the Bank of America said Friday that they were halting foreclosures through March 6. And Citigroup said it would halt foreclosures until the Obama administration completed the details of the loan modification program or until March 12, whichever is earlier. Citigroup’s action expands on a similar effort that it started in November.

The banks’ pledges apply to owner-occupied homes, not those owned by investors.

Mr. Obama’s announcement is expected to include details about how the administration plans to prod the mortgage industry to do a better job of modifying the terms of home loans so borrowers can have lower monthly payments.

Howard Glaser, a mortgage industry consultant who served in the Clinton administration, said that if the payments of two million borrowers were lowered by $500 a month, it would cost the government and lenders $6 billion each year — assuming lenders match half the cost.

Unlike previous loan modification plans, borrowers would not have to be in default to qualify, according to people briefed on the plan.

Figuring out who would qualify would be a challenge, especially as foreclosures continue to soar. More than 274,000 American households received at least one foreclosure-related notice last month, according to RealtyTrac, a foreclosure listing service.

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Ailing Banks May Require More Aid to Keep Solvent

By STEVE LOHR

Published: February 12, 2009

Some of the nation’s large banks, according to economists and other finance experts, are like dead men walking.

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A sober assessment of the growing mountain of losses from bad bets, measured in today’s marketplace, would overwhelm the value of the banks’ assets, they say. The banks, in their view, are insolvent.

None of the experts’ research focuses on individual banks, and there are certainly exceptions among the 50 largest banks in the country. Nor do consumers and businesses need to fret about their deposits, which are federally insured. And even banks that might technically be insolvent can continue operating for a long time, and could recover their financial health when the economy improves.

But without a cure for the problem of bad assets, the credit crisis that is dragging down the economy will linger, as banks cannot resume the ample lending needed to restart the wheels of commerce. The answer, say the economists and experts, is a larger, more direct government role than in the Treasury Department’s plan outlined this week.

The Treasury program leans heavily on a sketchy public-private investment fund to buy up the troubled mortgage-backed securities held by the banks. Instead, the experts say, the government needs to plunge in, weed out the weakest banks, pour capital into the surviving banks and sell off the bad assets.

It is the basic blueprint that has proved successful, they say, in resolving major financial crises in recent years.

Japan endured a lost decade of economic stagnation in the 1990s before it adopted such measures from 2001 to 2003.

The Swedish government took tough steps in 1992 and Washington did so in 1987 to 1989 to overcome the savings and loan crisis.

“The historical record shows that you have to do it eventually,” said Adam S. Posen, a senior fellow at the Peterson Institute for International Economics. “Putting it off only brings more troubles and higher costs in the long run.”

Of course, the Obama administration’s stimulus plan could help to spur economic recovery in a timely manner and the value of the banks’ assets could begin to rise.

Absent that, the prescription would not be easy or cheap. Estimates of the capital injection needed in the United States range to $1 trillion and beyond. By contrast, the commitment of taxpayer money is the $350 billion remaining in the financial bailout approved by Congress last fall.

Meanwhile, the loss estimates keep mounting.

Nouriel Roubini, a professor of economics at the Stern School of Business at New York University, has been both pessimistic and prescient about the gathering credit problems. In a new report, Mr. Roubini estimates that total losses on loans by American financial firms and the fall in the market value of the assets they hold will reach $3.6 trillion, up from his previous estimate of $2 trillion.

Of the total, he calculates that American banks face half that risk, or $1.8 trillion, with the rest borne by other financial institutions in the United States and abroad.

“The United States banking system is effectively insolvent,” Mr. Roubini said.

For its part, the banking industry bridles at such broad-brush analysis. The industry defines solvency bank by bank, and uses the value of a bank’s assets as they are carried on its books rather than the market prices calculated by economists.

“Our analysis shows that the banks have varying degrees of solvency and does not reveal that any institution is insolvent,” said Scott Talbott, senior vice president of government affairs at the Financial Services Roundtable, a trade group whose members include the largest banks.

Edward L. Yingling, president of the American Bankers Association, called claims of technical insolvency “speculation by people who have no specific knowledge of bank assets.”

Mr. Roubini’s numbers may be the highest, but many others share his rising sense of alarm. Simon Johnson, a former chief economist at the International Monetary Fund, estimates that the United States banks have a capital shortage of $500 billion. “In a more severe recession, it will take $1 trillion or so to properly capitalize the banks,” said Mr. Johnson, an economist at the Massachusetts Institute of Technology.

At the end of January, the I.M.F. raised its estimate of the potential losses from loans and other credit securities originated in the United States to $2.2 trillion, up from $1.4 trillion last October. Over the next two years, the I.M.F. estimated, United States and European banks would need at least $500 billion in new capital, a figure more conservative than those of many economists.

Still, these numbers are all based on estimates of the value of complex mortgage-backed securities in a very uncertain economy. “At this moment, the liabilities they have far exceed their assets,” said Mr. Posen of the Peterson institute. “They are insolvent.”

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Recovery Bill Gets Final Approval

Andrew Councill for The New York Times

HOUSE: VOTING YES Nancy Pelosi of California, the House speaker, after the stimulus bill passed the chamber on Friday by a 246-to-183 vote.

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By DAVID M. HERSZENHORN

Published: February 13, 2009

WASHINGTON — Congress on Friday approved a $787 billion economic stimulus measure, meeting the crushing mid-February deadline that Democrats had set for adopting the centerpiece of President Obama’s early agenda but without quelling partisan divisions in Washington. Not a single House Republican voted for the bill.

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Stimulus Plan Places New Limits on Wall St. Bonuses (February 14, 2009)

Stimulus Bill Would Bestow New Aid to Many Workers (February 14, 2009)

Times Topics: Credit Crisis — The Essentials

Graphic: How They Voted

Room for Debate: That 'Buy American' Provision (February 11, 2009)

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HOUSE: VOTING NO John A. Boehner of Ohio, the Republican leader, criticized the stimulus package as “spending, spending and more spending.”

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Andrew Councill for The New York Times

SENATE: VOTING YES Senator Susan Collins of Maine was a rare Republican who supported the $787 billion package, which ran to 1,073 pages.

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Doug Mills/The New York Times

SENATE: VOTING NO Senators Mitch McConnell, the minority leader from Kentucky, left, and John Barrasso of Wyoming, both Republicans.

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The House vote was 246 to 183, with just 7 Democrats joining all 176 Republicans in opposition. In the Senate, the vote, 60 to 38, was similarly partisan. Only 3 centrist Republicans joined 55 Democrats and 2 independents in favor.

The Senate finally adopted the bill at 10:47 p.m. after what appeared to be the longest Congressional vote in history. The peculiar 5-hour 17-minute process was required because Senator Sherrod Brown, Democrat of Ohio, had to return to Washington from his home state after attending a funeral home visitation for his mother, who died Feb. 2.

Under a procedural deal between the parties, the bill needed 60 votes to pass. The vote began at 5:30 p.m., but from 7:07 p.m., when Senator Evan Bayh, Democrat of Indiana, cast his “aye,” the tally hung at 59 to 38, until Mr. Brown arrived.

Mr. Obama is expected to sign the bill on Monday.

Among the senators voting against it was Judd Gregg, Republican of New Hampshire, who withdrew this week as the president’s nominee for commerce secretary.

Despite the bill’s promise of increased unemployment benefits and new health care subsidies, as well as more than $100 billion in aid for states, House Republicans did not break rank. Even those from states hit hardest by the recession opposed the bill, in a rebuke of the new president.

During the debate, the Republican leader, Representative John A. Boehner of Ohio, angrily dropped the 1,073-page bill text to the floor with a thump, as he accused Democrats of failing to read the legislation.

“The president made clear when we started this process that this was about jobs,” Mr. Boehner said after the vote. “Jobs. Jobs. Jobs. And what it’s turned into is nothing more than spending, spending and more spending.”

The $787 billion plan — a combination of fast-acting tax cuts and longer-term government spending on public works projects, education, health care, energy and technology — was smaller than Democrats first proposed. But, according to an analysis by the Congressional Budget Office, more than 74 percent of the money will be spent within the next 18 months, a relatively rapid pace that could determine whether the plan succeeds.

The House voted in the afternoon, and Speaker Nancy Pelosi and fellow Democrats cheered on the floor. Ms. Pelosi handed out chocolate bars to her committee chairmen, a gift to her from Steven A. Ballmer, the chairman of Microsoft. The label showed a picture of the Capitol and read, “A stimulus package we can all sink our teeth into.”

At a news conference, Ms. Pelosi and her top lieutenants praised Mr. Obama for completing the legislation so quickly.

“The president requested swift, bold action,” Ms. Pelosi said. “The American people are feeling a great deal of pain. They have uncertainty about their jobs, about health care, about the ability to pay for the education of their children, and sad to say in our great country, even to put food on the table. And today we have passed legislation that does take that swift, bold action on their behalf.”

Just four weeks into Mr. Obama’s presidency, the Democrats boasted that they had already approved three major bills: a measure to curb pay-discrimination against women in the workplace, a broad expansion of the state children’s health insurance program and the stimulus.

“We have yet to pass the 30th day of this administration,” said the House majority leader, Steny H. Hoyer, Democrat of Maryland. “And we have passed historic legislation.”

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Failed Banks Pose Test for Regulators

Isaac Brekken for The New York Times

A Terrible Herbst station in Las Vegas. The F.D.I.C. determined Reno-area Terrible Herbst stations could not repay a loan.

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By ERIC LIPTON

Published: February 13, 2009

WASHINGTON — When regulators took over the First National Bank of Nevada last year, they faced a showdown with the Terrible Herbst, the mustachioed cowboy who boasts of being the “best bad man in the West.”

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Terrible Herbst stations offer slot machines as well as gas.

This was no real gunslinger, but the name and logo of a chain of gas stations and convenience stores in Nevada that feature slot machines next to candy and beer.

The family-owned Herbst chain, auditors at the Federal Deposit Insurance Corporation concluded, did not generate enough sales at its Reno-area gas stations to support the repayment of a loan, leaving auditors with three bad choices: Move to take over those stations and put the government in the gambling business. Cut off any flow of additional loan money. Or sell the loan at a steep loss.

The F.D.I.C. faces tough choices like this every day as it struggles to manage $15 billion worth of loans and property left from failed banks. If still-to-be-sold assets from IndyMac Bancorp of California, whose demise last year was the fourth-largest bank failure, are included, the number jumps to $40 billion.

The F.D.I.C. inherited the collection of loans and property after the failure of 25 banks in 2008, compared to just three in 2007. Thirteen more have failed this year, including four on Friday night, and no one doubts that more are on the way. The F.D.I.C., which insures bank deposits and ultimately has responsibility for liquidating failed banks, is selling hundreds of millions of dollars worth of loans through eBay-like auction sites.

DebtX of Boston and First Financial Network of Oklahoma City, for instance, sell loans at auction to investors who typically pay 5 cents to 85 cents for each dollar of outstanding principal, according to Bliss A, Morris, First Financial’s president. It is unloading hundreds of houses across the country at bargain basement prices. In November, Lula Smith, 86, of Kansas City, Mo., bought a two-bedroom house across the street from her home for $4,000, one-tenth of its value two years ago.

“I am real satisfied with that price, yes sir,” she said, adding that after about $1,000 in additional costs to repair the house, and some new carpet, her son and daughter-in-law will move in. “It was a nice little deal, indeed.”

And — in the most closely watched tactic — the F.D.I.C. is negotiating a series of billion-dollar deals with private equity partners who will take over huge batches of loans in exchange for a chunk of the sale proceeds.

Even as the solutions to the financial crisis are debated in Congress and among economists, the F.D.I.C., one of the agencies that deals most closely with the nation’s banks, has already been transformed.

The rising tide of foreclosed real estate is so overwhelming that the agency, which had shrunk to a relatively tiny 4,800 employees from as many as 15,000 in the last period of bank meltdowns in the 1990s, is in the midst of a military-scale buildup as it undertakes one of the greatest fire sales of all time.

The agency is frantically calling in retirees and holding job fairs, looking to hire as many as 1,500 people. It has rented a high-rise office building in Irvine, Calif., the new headquarters for a West Coast branch of 450 employees who are wrestling with a real estate crisis in one of the hardest-hit regions. It is also budgeted to pay hundreds of millions of dollars for a small army of contractors to augment its staff. “We are trying to be ready for the inevitable,” said Mitchell L. Glassman, director of the F.D.I.C.’s division of resolutions and receiverships.

The budget for that division is increasing to $1 billion this year, from $75 million last year. Nearly $700 million of the increase is set to go to contractors like RSM McGladrey of Minneapolis, which provides temporary workers to help the agency close banks. These workers come at an hourly rate of $50 to $250. It is a high price, but the F.D.I.C contends the cost is much less than it would have to pay to hire permanent staff.

“It was so painful downsizing after the last banking crisis,” James Wigand, deputy director of the F.D.I.C. receivership division, said, referring to the layoffs after the last cycle of bank failures. “We’re really trying to avoid going through that again.”

The blitz by the F.D.I.C. may offer lessons for the Treasury Department, which is separately struggling with an even more monumental challenge: how to help still-operating banks move giant loads of toxic debt off their balance sheets, in the hope that the banks will begin taking risks again and stimulate the economy.

Tuesday, for example, is the deadline for online bids for $108 million in loans left from the default of Freedom Bank of Bradenton, Fla., which DebtX is selling at auction.

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Morgan Stanley Fires Executive in China on Suspicions of Bribery

By DAVID BARBOZA

Published: February 12, 2009

Morgan Stanley recently fired a high-ranking executive working for its real estate subsidiary in China after discovering evidence that he may have violated the United States Foreign Corrupt Practices Act.

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The company, which disclosed the information in a filing with the United States Securities and Exchange Commission on Feb. 11, did not identify the executive and said it was continuing to investigate the matter.

The company also said it had informed American authorities about the case.

People knowledgeable about the investigation said on Thursday that the fired executive was Garth Peterson, a managing director based in Shanghai who was once considered a powerful figure in China’s real estate investment scene. They did not want to be named discussing a current investigation.

Mr. Peterson, who speaks fluent Chinese and is respected for his knowledge of the Shanghai real estate market, did not respond to an e-mail message or answer his mobile phone on Thursday.

He left Morgan Stanley last December, according to people close to him.

The case could deal a setback for Morgan Stanley’s real estate investment operations in China, where its subsidiary has made a number of big deals, particularly in Shanghai, after raising hundreds of millions of dollars from global investors.

Although China’s real estate market has slumped, it had boomed from about 2002 until about a year ago, lifting Morgan Stanley’s investment banking fortunes as it took some of China’s biggest real estate companies public.

In its S.E.C. filing, Morgan Stanley offered few details about the case and did not give any indication of whether any of its real estate deals in China were at risk. The brief statement said, in part, that the company “had recently uncovered actions initiated by an employee based in China in an overseas real estate subsidiary that appear to have violated the Foreign Corrupt Practices Act.”

The Foreign Corrupt Practices Act prohibits people working for American companies operating abroad from paying bribes or making corrupt payments to foreign officials to obtain or keep business.

Mr. Peterson, who began working for Morgan Stanley in about 2003, was named a managing director at the company in 2007. He was instrumental in helping Morgan Stanley find properties to acquire and sell in China and often worked closely with a Chinese government investing arm.

A spokesman for Morgan Stanley declined to comment on the case Thursday.

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Britain Investigates A.I.G. Unit in London

By BLOOMBERG NEWS

Published: February 12, 2009

The American International Group’s financial products unit, which brought the firm to the verge of collapse with bad bets on credit-default swaps, is being investigated by British prosecutors for possible criminal conduct.

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Investigators of the Serious Fraud Office are working with the authorities in the United States who are conducting separate reviews, the fraud office, which is based in London, said Thursday. A.I.G. said it was cooperating with the inquiry. The investigation does not involve A.I.G.’s insurance operations.

Separately, A.I.G. said it had put its Tokyo headquarters building up for sale in an effort to raise money to pay down a loan from the United States government. The company owns a 15-story building in Marunouchi, Japan’s most expensive business district.

A.I.G., which committed to sell most of its businesses to pay back the government, had to restructure its bailout last year after reduced access to credit constricted the ability of potential buyers to bid on the company’s units.

The government rescued A.I.G. last year to cut losses for banks that did business with the insurer.

A.I.G. is unwinding its financial products business, which sold derivatives including protection on fixed-income assets and caused about $34 billion in write-downs amid the collapse of the subprime mortgage market.

Joseph Norton, a spokesman for A.I.G., declined to comment on the investigation in Britain, but the company acknowledged it in a statement.

The Justice Department and the Securities and Exchange Commission are investigating how A.I.G. valued its swap portfolio and disclosed information about the contracts to investors, A.I.G. said in a November regulatory filing.

A spokesman for the Serious Fraud Office, Sam Jaffa, said the agency planned to meet with American investigators and company executives in the next two to three weeks.

Britain’s market regulator, the Financial Services Authority, is also participating in the A.I.G. inquiry. The Serious Fraud Office investigates and prosecutes the most complex and high-value financial crime in Britain.

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Twitter Raises $35 Million

By Claire Cain Miller

Updated 3:45 p.m.: Added comment from Todd Chaffee of Institutional Venture Partners.

Twitter has raised $35 million in venture capital, bringing the microblogging start-up’s total funding to $55 million.

The new money came from Institutional Venture Partners and Benchmark Capital. Peter Fenton, a partner at Benchmark who has also invested in Web 2.0 darlings Yelp and FriendFeed, will join the Twitter board.

The fundraising round brings in two top West Coast venture firms. The San Francisco start-up had previously raised $20 million from investors including Union Square Ventures, based in New York, and Spark Capital, based in Boston. Those firms will also participate in the latest round, as could previous angel investors including Ron Conway and Marc Andreessen, which could bring the total to $40 million, said Todd Chaffee of Institutional Venture Partners. They are still working out the final details.

The company was not looking for new investors and still has money in the bank, said Biz Stone, a co-founder, in an interview. In December, Twitter C.E.O. and co-founder Evan Williams said that though he had originally planned to raise more money in 2009, when the economy turned, he decided not to. But the two new investors approached Twitter, Mr. Stone said, and “we went for it.” Institutional Venture Partners closed its part of the deal on Jan. 16 and Benchmark closed its funding Thursday night.

The announcement from Mr. Williams appeared, of course, in fewer than 140 characters on Twitter: “We raised more money: http://bit.ly/mbEO9 I feel very fortunate we were able to do this and very excited about what we will build. Go team.”

“We’re fired up,” Mr. Chaffee said. “They’ve had unbelievably explosive organic growth like I’ve never seen before, and an amazing level of interest from developers, the digerati and the media. We really need all hands on deck to figure how to shepherd that growth.”

Twitter will use the money first and foremost to hire new people. “We really need to grow the company,” Mr. Stone said. “We have 29 employees, which is shockingly low considering the work we have to do.”

Despite its growing popularity — active users have increased 900 percent in the last year, Mr. Stone said — Twitter has not earned a single dollar. It does not sell advertising on its site and is free for users. The company plans to slowly roll out a revenue plan over the next few months. That will likely include charging businesses for certain features they can use to talk to customers on Twitter.

Though Twitter has said that revenue is a priority in the first quarter of this year, the new money could buy the company some time. “I would much rather have this thing grow to natural scale than build in a revenue model artificially, too quickly,” Mr. Chaffee said.

Mr. Fenton said he had been watching the company, which turned down a reported $500 million acquisition offer from Facebook last year, for two years.

“They decided to partner with an active West Coast syndicate to vigorously pursue the path of independence,” he said. “As a business opportunity, it jumped out to us as having many potential revenue streams that support, and don’t undermine, its success.” h

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