SENATE TACKLES MORTGAGE CRISIS

STATE’S SEASON OF FIRE BAY AREA Lacy Atkins / The Chronicle HOME & GARDEN 1 Stylish, fire-resistant houses in the Oakland and Berkeley hills 1 Fire preparedness checklist, how to stock an emergency kit 1 Butte County blaze claims a life — threat to Paradise eases 1 Air quality outlook for the weekend in Northern California At left, firefighters take a break from Butte County blaze. xxxx x • Printed on recycled paper | SATURDAY, JULY 12, 2008 | sfgate.com 415-777-1111 75¢ SENATE TACKLES MORTGAGE CRISIS RUN ON BANK: FDIC takes over IndyMac after FANNIE/FREDDIE REVAMP: House gets bill to let panicky depositors pull out $100 million a day By Kathy M. Kristof and Andrea Chang Los Angeles Times borrowers renegotiate loans, avoid foreclosure By Zachary Coile Chronicle Washington Bureau Pasadena — The federal government took control of Pasadena-based IndyMac Bank on Friday in what regulators called the second-largest bank failure in U.S. history. Citing a huge run on deposits at the $32 billion bank, regulators shut its main branch three hours early, leaving customers stunned and upset. One woman leaned on the locked doors, pleading with a teller: “Please, please, I want to take out a portion.” All she could do was read a two-page notice taped to the door. The bank’s 33 branches will be closed over the weekend, but the Federal Deposit Insurance Corp. will reopen the bank Monday as IndyMac Federal Bank, said the Office of Thrift Supervision, or OTS, in Washington. Depositors will not have access to Internet or phone banking over the weekend, regulators said, but customers can continue to use ATMs, debit cards and checks. Normal branch hours, online banking and phone banking services were to resume operations Monday. Federal authorities said that, based 1 BANK: Page A8 IN BUSINESS CRISIS OF CONFIDENCE 1 Fear that giant mortgage companies Freddie Mac and Fannie Mae will collapse ignites panic on Wall Street. 1 Three roads for Freddie and Fannie and where they could lead: Business as usual, a bailout or just plain failure. Washington — Congress took a step closer to addressing the nation’s housing crisis Friday as the Senate passed a long-delayed bill to revamp the oversight of mortgage giants Freddie Mac and Fannie Mae and to help hundreds of thousands of people to avoid foreclosure by renegotiating their loans. The bill still faces hurdles: It now goes back to the House, where lawmakers are seeking changes, including an attempt by Speaker Nancy Pelosi to raise the conforming loan limits — which govern the size of loans Freddie and Fannie can buy — to help borrowers in expensive housing markets like the Bay Area. The Senate bill set the figure at $625,000; Pelosi would prefer $730,000. The White House has threatened a veto over several provisions. But all sides agree a deal is likely before the August break because no one wants to leave for vacation without approving some legislation to confront the worst housing downturn since the Great Depression. “Everybody wants to get something done,” said Erick Gustafson, senior vi1 HOUSING: Page A8 “In doing this along the waterfront, which is arguably the most beautiful place in the city, it really creates an only-in-San Francisco event.” Wade Crowfoot, S.F. director of climate protection initiatives Fundraiser Julie Lee convicted in fraud case S.F. grant scheme ended rising career of Kevin Shelley By Robert Selna Chronicle Staff Writer Kim Komenich / The Chronicle The Embarcadero will close to traffic the Sunday before Labor Day, and again two weeks later, to encourage people to walk and exercise. Streets of S.F. — 6-mile party zone By Cecilia M. Vega Chronicle Staff Writer San Franciscans will be dancing in the streets — literally— after Mayor Gavin Newsom’s office obtained the necessary permits this week to shut down 6 miles of thoroughfare during two Sundays this summer and turn the pavement into a party zone. Starting in the Bayview, stretching past the Giants ballpark, running up the Embarcadero and ending in Chinatown, the northbound lanes of the sweeping route will be closed to cars and opened to pedestrians from 9 a.m. to 1 p.m. on Aug. 31 — Labor Day weekend — and again two weeks later, on Sept. 14. The idea is for people to partake of physical activity in a wide, open space not usually available to city dwellers. There will be a roller skating rink near the Bayview Opera House. Kids will learn bicycle basics in a “freedom from training wheels” course near Mission Bay. Yoga classes will be offered in Ferry Park. And yes, there will be dancing. San Francisco Bay “Cheryl Burke from (the television show) ‘Dancing With the Stars’ organized some dance classes near China Basin,” said Wade Crowfoot, Newsom’s director of climate protection initiatives, who is organizing the event. But not everyone is celebrating. Merchants at Fisherman’s Wharf and Pier 39 are furious with City Hall for picking two Sundays at the height of the summer season to bar cars from the Embarcadero just south of those tourist meccas. 1 STREETS: Page A8 NE W CO MB AV AV E. E. San Francisco community organizer Julie Lee, whose questionable fundraising helped push former California Secretary of State Kevin Shelley out of politics, was found guilty Friday of federal criminal charges in an alleged plot to funnel state grant money to Shelley’s 2002 campaign. A U.S. District Court jury in Sacramento found Lee guilty of five of seven charges — two of mail fraud and three of witness tampering — and acquitted her of two other mail-fraud charges. All the charges related to a $500,000 grant for a Sunset District community center that was never developed. Lee, 61, is to be sentenced on Sept. 23. While she faces a maximum of 70 years in prison and $1.2 million in fines on all the counts combined, she is likely to spend about three years in prison given federal sentencing guidelines, her lack of a criminal record and other factors. The Chronicle’s 2004 reporting on Lee’s fundraising improprieties led to state and federal investigations, brought Shelley’s rising political career to a halt and shook San Francisco’s political establishment. 1 LEE: Page A8 Legal troubles Convicted: Julie Lee, above, an influential San Francisco community organizer and political fundraiser, has been convicted of five criminal charges in a scheme to funnel state grant money to Kevin Shelley’s 2002 campaign for secretary of state. Sentence: Lee likely faces about three years in prison. What’s next: Another criminal case against Lee, alleging theft, forgery and embezzlement, is pending in state court. 20TH ST. 22ND ST. The northbound lanes of the route will be closed to automobile traffic while the southbound lanes remain open. One-way Washington Street will be closed to traffic up to Portsmouth Square. P Portsmouth Square E ET KE A A A A A A A AR M M M M M M M D 2N 3R D . ST H 4T . ST 80 280 BR N NA AN A Bayview Opera House PA LO U . ST MARIPOSA ST. H 18TH ST. T H CESAR CHAVEZ E AT&T PARK 23RD ST. 9 a.m. to 1 p.m. Aug. 31 and Sept. 14 Ferry Building EM BARCADERO NCOIS S T. Y FRA TERR D ST. 3R . ST H 6T ILLINOIS ST. CA RG O Sunday street parties NORTH Promenade NATION/WORLD GREEN PARTY’S LIKELY CANDIDATE Former Democratic Rep. Cynthia McKinney is expected to win the Green Party’s presidential nomination. A3 W AY 3RD ST. T O TO GTO GTON ST. GTO W W W W W W W WASHIN 0 M ILE 1 BID TO INDICT SUDAN PRESIDENT S.F. John Blanchard / The Chronicle rd International Criminal Court chief prosecutor will seek to charge Omar el-Bashir with crimes against humanity. A9 WEATHER Fog, then mostly sunny. Highs to 94. Lows to 52. B6 Index is on Page A2 . ST HIGHBROW EROTICA: Violet Blue investigates CineKink, the X-rated film fest. sfgate.com/ZEDB . ST INSTA-SCANDALS: Why worry about bothersome issues? Cartoonist Mark Fiore. sfgate.com/ZEDC BRIDGE BARRIERS: Which of the five designs do you prefer for the Golden Gate? sfgate.com/ZECL