Mayor Ron Dellums and Gov. Arnold Schwarzenegger on Friday announced a loan program that may help some Oakland homeowners avoid foreclosure.

At a news conference in the city’s working-class Fruitvale District, the mayor and governor said One California Foundation in Oakland has established a $1 million bridge-loan fund to help borrowers who don’t qualify for recent federal and state rate-freeze programs.

Initially the program will focus on Oakland homeowners, but officials said it could be expanded throughout the state. Oakland has the 10th highest foreclosure rate in the nation.

In the third quarter of this year, the city recorded one foreclosure filing for every 71 households, a 268 percent increase from the same period in 2007, according to RealtyTrac, a company that collects and sells information on pending foreclosures.

The deferred-interest loans issued by the foundation will not have to be paid back for 10 years unless a homeowner sells his or her property or refinances in that period, officials said.

“This will help owners who can make their current payments on their homes,” Dellums said. “Our hope is that this creative approach will lend credence and provide inspiration to other lending institutions to deal with all aspects of this issue.”

In order to qualify for assistance from the foundation, homeowners must be Oakland residents, have a stable income, be current on their mortgage payments and reside in their homes. Successful applicants also must attend financial planning classes.

Schwarzenegger said while there is “no silver bullet” to immediately end the foreclosure crisis, the bridge loan program will help homeowners.

“When people lose their homes, it’s not only a problem for them; it’s bad for the neighborhood, for businesses, the economy and state revenue,” Schwarzenegger said. “No one wins. Everyone loses. This $1 million is just to start. We hope to find more foundations to put money into this. By working together, we can protect the American Dream.” Resources

For more information about resources for homeowners:

(888) 995-4673

«www.yourhome.ca.gov»

E-mail Christopher Heredia at cheredia@sfchronicle.com.

The chairman of the hospital trust at the centre of a “truly shocking” killer bug scandal resigned today, the health secretary told MPs.

Alan Johnson announced James Lee’s resignation this afternoon after being summoned before MPs to update them on events at the Maidstone and Tunbridge Wells Trust following the tabling of an “urgent question” in the Commons by the shadow health secretary, Andrew Lansley.

Mr Lee’s decision to stand down comes after Mr Johnson triggered a Department of Health review into his role leading the board of the Maidstone and Tunbridge Wells Hospitals NHS trust in Kent.

The trust came in for heavy criticism last week in a damning report from the Healthcare Commission into outbreaks of the clostridium difficile infection that claimed the lives of at least 21 patients - and probably 90 - between 2004 and 2006.

The health secretary told MPs that the Healthcare Commission’s report was “a truly shocking document” and said he wanted to apologise on behalf of the government and the NHS.

Answering Mr Lansley’s emergency question, he said: “We must all shoulder our share of the blame. But I hope the house will recognise that the awful failures in Maidstone and Tunbridge are entirely unrepresentative of the standards of care that patients and the public rightly expect and is delivered in hospitals across the country, day after day.”

Mr Johnson told the Commons that he had accepted Mr Lee’s resignation as chairman of the trust.

Mr Lee came in for criticism when it emerged that the trust’s former chief executive, Rose Gibb, who resigned days before the report’s publication, was offered a severance package worth a reported 250,000.

Mr Johnson ordered the trust to withhold the payment, pending legal advice.

In a written statement earlier today, he announced a Department of Health review of the decision-making process surrounding her departure and Mr Lee’s role in it.

The commission found that 1,176 patients were infected with C difficile during two outbreaks of the bug at the Maidstone and Tunbridge Wells Hospitals NHS Trust between April 2004 and September 2006. At least 345 later died.

Its report concluded that C difficile was probably or definitely the main cause of death in 90 cases. And it stated that in 21 of those cases there was no doubt that C difficile was to blame.

Mr Lansley said the events at the trust were not an “isolated” occurrence, but a result of an obsession with NHS targets which took the focus away from patient safety.

“We have had other cases and the common link between them is that managers in the NHS have been more focused on the government’s targets and the government’s imperatives than they have on patient safety,” said Mr Lansley.

NEW YORK: Now that Blackstone Group is off and running, it needs to start looking over its shoulder.

Just as the private equity group has overcome a maelstrom of opposition to go public Friday, its archrival, Kohlberg Kravis Roberts, was planning an initial offering of its own, people briefed on the matter said Thursday.

On Thursday night, Blackstone priced its eagerly awaited initial public offering at $31 a unit, at the top of its range, raising $4.13 billion.

Blackstone, with the help of an army of underwriters, 17 in all, sold 133.3 million common units, or a 12.3 percent stake, in one of the largest offerings in the United States in nearly five years.

On Friday, shares soared almost 20 percent in their debut on the New York Stock Exchange before slipping back to $35.10 in afternoon trading.

The firm has already sold a $3 billion nonvoting stake to a Chinese state-owned investment company.

Blackstone opened a private equity office in Hong Kong earlier this year to expand its investment activities in the Asia-Pacific region.

Scott Sweet, managing director of IPO Boutique, said the Blackstone offering was heavily oversubscribed, with investors not only in the United States but also in Asia, Europe and the Middle East clamoring for a piece of the action.

That augured well for trading of the stock Friday, Sweet said.

“I expect a strong opening and an orderly opening,” he said, adding that buyers would probably receive far smaller allotments of the stock than they had requested.

Over the last week, a number of lawmakers have proposed tax legislation that could trim hundreds of millions of dollars from the profit of private equity and offered broadsides aimed at turning aside Blackstones offering while trying to discourage others from following.

But Blackstone has persevered, and it now seems that Kohlberg Kravis is determined to match its rivals achievement. The firm has retained investment banks including Morgan Stanley and could file a prospectus within the next month, people familiar with the matter said.

They cautioned, however, that Kohlberg Kravis might yet decide against an offering, depending upon how Blackstones stock performs and how the tax issues play out in Washington.

A spokeswoman for Kohlberg Kravis declined to comment.

Though it made initial preparations months ago, Kohlberg Kravis moved forward after seeing the overwhelming interest in Blackstones offering.

The two firms have dueled for years over the size of their fund-raising, their deals and their egos. Over the last year, the two have traded claims to the largest leveraged buyouts ever.

The rivalry extends to the personal realm as well. Relations between the heads of the two firms, Stephen Schwarzman of Blackstone and Henry Kravis of Kohlberg Kravis, have long been frosty.

At Schwarzmans lavish 60th birthday party in February, the guest list notably excluded Kravis.

With the industrys two heavyweights pursuing offerings, equity firms like Carlyle Group, TPG Capital and Apollo Management may need to go public. The move allows the firms to establish a permanent source of capital.

Altogether, the firm, which started in 1985 with just $400,000, will be valued at $33.6 billion, giving it a higher market value than more established financial players like Bear Stearns, the investment bank.

Blackstones appearance on the New York Stock Exchange, under the ticker BX, marks a watershed moment for private equity, the industry that uses borrowed money to buy companies, turn them around and resell them for often handsome profits.

The last two years have proved extraordinarily lucrative for these firms, as lenient lenders and an influx of money from investors like pension funds have fueled a leveraged buyout boom.

Unlike before, investors in Blackstone will hold pieces of the firm itself, rather than in one of its multibillion-dollar funds. That means unit holders will share directly in its profit, but in an unusual twist, they will have little say over management of the company.

No one will reap more from the offering than Blackstones two founders. With a 24 percent position in the firm, Schwarzman will hold a $7.7 billion stake and could earn up to $677 million from the offerings proceeds. That is on top of the nearly $400 million in compensation he took home last year.

The firms chairman, Peter Peterson, who is retiring, will earn $1.88 billion from the offering and will retain a 4 percent stake.

Another private equity firm, Fortress Investment Group, went public in February at $18.50 a share. Its shares closed Thursday at $25.88.

Top House Democrats introduced legislation on Friday that would more than double taxes on many managers of hedge funds, buyout firms and real-estate partnerships, Bloomberg News reported from Washington.