Boom Bust and Blame

Crisis A-Z


Obama, Barack:
The 44th President of the United States and the first African-American citizen to hold the office. Before being sworn in on January 20, 2009, President Obama was a junior United States Senator from Illinois, where he served from January 2005 until November 2008, resigning his seat following his election to the White House.

President Obama was born in Honolulu, Hawaii on August 4, 1961 to Barack Obama, Sr. from Kenya, and Stanley Ann Dunham from Kansas. The couple met in Hawaii while attending the University of Hawaii, where Obama's father was an international student on a scholarship. His father left for his native Kenya and his parents divorced. Obama's mother married another student at the University of Hawaii and moved to Jakarta, Indonesia in 1967. Obama and his mother moved back to Hawaii in 1971, where his maternal grandparents, Stanley Dunham, who served in Patton's army, and Madelyn Dunham, helped raise him. They enrolled him at the Punahou Academy, where he graduated with honors in 1979.

Obama attended the Occidental College in Los Angeles to later transfer to Columbia University, where he earned a bachelor's degree in political science. After working for the Business International Corporation and the New York Public Interest Group (NYPIRG), President Obama moved to Chicago to work as a community organizer with low-income residents. He went on to attend Harvard Law School in 1988 and was elected the first African-American president of the Harvard Law Review in 1990. He graduated magna cum laude in 1991. He then returned to Chicago, where he taught constitutional law at the University of Chicago and helped organize voter registration drives during Bill Clinton's 1992 presidential campaign.

Obama ran for the Illinois State Senate as a Democrat and was elected in 1996 as State Senator for Chicago's Thirteenth District. He went on to win the election for the United States Senate for Illinois in November 2004, where he received 70 percent of the vote—the largest electoral victory in Illinois history. He was sworn into office on January 4, 2005.

As a United States Senator, Obama reached across the aisle to pass reforms on lobbying, control on weapons, and transparency by the government by putting federal spending online. President Obama is also the author of two books; his autobiography Dreams From My Father: A Story of Race and Inheritance, published in 1995, and The Audacity of Hope: Thoughts on Reclaiming the American Dream, published in 2006.

Before becoming the 44th President of the United States, President Obama was locked in a tough battle for the Democratic presidential nomination against U.S Senator from New York, Hillary Rodham Clinton. He became the official Democratic nominee on June 3, 2008 and went on to defeat Republican presidential nominee John McCain as he was elected on November 4, 2008.

President Obama met his wife, Michelle, in 1988 and they have been married since October 1992. They are parents of two daughters, Malia and Sasha.

O'Neal, Stanley:
Former President, CEO, and Chairman of the Board of Merrill Lynch & Co. First appointed as CEO in December 2, 2002, O'Neal is the first African-American to become the head of a major Wall Street brokerage firm. He also has a long relationship with General Motors, where he made part of the Board of Directors from 2001 to 2006.

Born on October 7, 1951 in Roanoke, Alabama, O'Neal attended the General Motors Institute, where he earned a degree in industrial administration in 1974. He went on to work as a supervisor for GM and earned a scholarship that allowed him to attend Harvard University two years later. In 1978, he obtained a Master of Business Administration degree in finance. After, he stayed with GM working as an analyst in New York City. He went on to hold high-profile positions, including general assistant treasurer.

After eight years at GM, he left the company to join Merrill Lynch in 1986, where he held important positions such as Global Head of Capital Markets and co-Head of Corporate and Institutional Client Group. He eventually became the company's CFO from 1998 to 2000. He became president a year later and Chief Executive Officer in 2002. He stayed with Merrill Lynch until he was ousted in 2007 as the sub-prime mortgage crisis developed and claimed $8 billion from the firm.

O'Neal is married to economist Nancy Garvey and they have a son and a daughter, who are twins.

Option ARM:
An adjustable-rate mortgage that offers several monthly payment options: fully amortizing over 30 years, fully amortizing over 15 years, interest-only payments, or a payment based on a below-market "payment rate" which fails to cover even the interest which is due. The interest rate on a payment-option ARM is typically very low for the first 1 to 3 months. But that rate usually rises to a rate closer to that of other mortgage loans over time. All unpaid interest is added to the amount owed on the mortgage, resulting in a higher balance; this is known as negative amortization.

Many payment-option ARMs limit, or cap, the amount the monthly minimum payment may increase from year to year. Payment-option ARMs have a built-in recalculation period, or recast, usually every 5 years. Lenders end the option payments if the amount of principal owed grows beyond a set limit.

Option ARMs date back to mid-1980s, when fixed rate mortgages typically charged between 9% and 10% interest. ARMs based upon the 11th District Cost of Funds Index, or COFI, aka "coffee" ARMs, were available at comparably attractive initial rates around 7%. They featured new and novel ideas like annual "payment caps" instead of per-adjustment interest rate limits each year.