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Zombie Banks: How Broken Banks and Debtor Nations are Crippling the Global Economy

Book Description

An in-depth look at the essential issues surrounding zombie institutions and their effect on the global economy

"The title is worthy of a B movie, but it's also apt. Bloomberg News reporter Yalman Onaran, supported by former U.S. Federal Deposit Insurance Corp. chief Sheila Bair - who provides a foreword and numerous interviews - urge that insolvent banks both small and too big to fail be allowed to do precisely that. Reading bank balance sheets is not everyone's idea of a good time. But Mr. Onaran, with support from Ms. Bair, does the chore and explains what it means. Mr. Onaran shows that the process of rescuing dead and dying banks is increasing systemic risk in the global banking system. And that is really more frightening than scream flicks from Tinseltown." -- Financial Post

Zombie banking has become standard operating procedure for big debtor nations. They prop up failing institutions, print money, and avoid financial corrections. But in an attempt to prolong the inevitable, bigger problems are created. The approach used now has not, and will not, work. This timely book reveals why. Zombie Banks tells the story of how debtor nations and failing institutions are damaging the long-term prospects of the global economy.

Author Yalman Onaran, a veteran Bloomberg News reporter and financial banking sector expert, examines exactly what a zombie bank is and why they are kept alive. He also discusses how they hurt economic recovery and what needs to be done in order to restore stability. Along the way, Onaran takes an honest look at how we arrived at this point and details the harsh realities that must be faced, and the serious steps that must be taken, in order to get things headed in the right direction.

  • Puts insolvent banks and debtor nations in the spotlight and examines how they are crippling the global economy

  • On the record sources include Paul Volcker, Joseph Stiglitz, Sheila Bair, and many more bank executives, regulators, politicians, and policymakers in the United States and abroad

  • Takes the complexity of the current situation and translates it in a way that makes it understandable

While the short-term measures taken to stave off depression and rejuvenate economic growth may offer hope, they are unsustainable over the long term. Get a better look at what really lies ahead, and what it will take to improve our economic situation, with this book.

Table of Contents

  1. Cover
  2. Additional Praise for Zombie Banks
  3. Bloomberg Press
  4. Title page
  5. Copyright page
  6. Dedication
  7. Foreword
  8. Preface
  9. Cast of Characters
  10. Chapter 1 Zombies in Our Midst
    1. The Art of Keeping Zombies Alive
    2. Kicking the Can Down the Road
    3. Zombies and Lost Decades
  11. Chapter 2 Lessons Not Learned
    1. The U.S. Thrift Crisis
    2. Japan’s Lost Decade
    3. Delaying the Fix Increases Costs
  12. Chapter 3 Europe’s Sovereign Blues
    1. When PIGS Fly
    2. Zombies in the Pigsty
    3. Putting Lipstick on a Pig
    4. Spain’s Zombies
    5. When PIGS Stop Flying
  13. Chapter 4 Germany’s Untouchable Zombies
    1. Landesbanks in the Land of Banks
    2. Politics and Banking
    3. Cheap Money, One Last Time
    4. Even the EU Can’t Shut Them Down
    5. Irish Connection 2.0
    6. Other German Zombies
    7. Broken Models, Suffering PIGS
  14. Chapter 5 Ireland’s Zombies Bring the House Down
    1. The Celtic Tiger’s Final Sprint
    2. The Guarantee from Hell
    3. You Can’t Burn the Creditors
    4. Not So Innocent EU
    5. Zombies No More?
    6. The Crippled Housing Market
    7. Will the Tiger Make It?
  15. Chapter 6 The Reincarnation of Iceland’s Banks
    1. The Land of Fire and Ice Catches Fire
    2. The Unheeded Fire Alarm
    3. Devaluation No Panacea
    4. Good Bank–Bad Bank, Sort of . . .
    5. The Icesave Saga
    6. Reincarnation and Recovery
  16. Chapter 7 U.S. Zombies on IV Drip
    1. Saving Citi—Again
    2. A Snake Gobbling Up Poisoned Rats
    3. “Pretend and Extend”
    4. Turn a Blind Eye to Weak Capital
    5. Bad Bank or Just an Administrative Concept?
    6. Tenuous Existence
  17. Chapter 8 The Fight to Rein in the Banks
    1. Missed Opportunity
    2. Volcker’s Friends and Enemies
    3. Fear of Lincoln’s Amendment Helps Volcker
    4. The Republican Toughie
    5. Finding Ways to Skinny the Banks
    6. The Farm Boy versus Goliath
    7. Never-Ending Assault
  18. Chapter 9 To Foreclose or Not to Foreclose?
    1. Protecting Home Equity Loans
    2. Banks Wave the Moral-Hazard Card
    3. Principal Reduction: The Bogeyman
    4. Servicing Costs Rise
    5. Crappy Mortgages Returned
    6. When the Levees Are Opened
  19. Chapter 10 Bigger Banks, More Derivatives, Higher Risk
    1. Banks Get Help in Their Derivatives Fight
    2. Unaligned Interests of Bondholders
    3. Too Interconnected to Fail
  20. Chapter 11 Killing Zombies and Preventing Their Return
    1. Who Bears the Cost?
    2. The Fallacy Over Capital
    3. Breaking Up the Big Boys
    4. Coming to Terms with Reality
  21. Epilogue
  22. About the Author
  23. Index