Zombie Bank

The book presents an in-depth overview on what a zombie banks is, why they are allowed to operate, and why the approach will inevitably fail. Through the use of exclusive reports from bank executives, regulators, politicians, and policymakers, Onaran takes the reader on a global tour of these banks—which are being kept alive in countries from the United States to Germany, Spain, and Japan. Two of the largest, Bank of America and Citibank, are in the United States. In Zombie Banks, the author has shown us the practice of zombie banking, explained why it does not work, and laid out the steps needed to rid the global financial community of these dangerous institutions.

Zombie bank started to appear in 1990s with the huge declining of the price of real estate and stocks. It pulled every Japanese banks into huge bad debt situation. However, Japan refused to accept the suggestion from the US and took a way that government secretly support those bad debt banks instead of bankrupt. This solution do nothing good to the improvement for its financial situation and made Japan’s economy depressed for a decade.

While covering the collapse of Lehman Brothers and Bear Stearns in 2008, Onaran discovered that no one within those organizations had the complete picture of how the companies functioned and, therefore, no one had any answers. Zombie Banks is Onaran’s attempt to connect the dots that make up the current global financial landscape.

Zombies are most commonly known as undead, lifeless creatures that usually take hold of a living being through some type of supernatural force. However, as the author illustrates in his new book, zombies can also inhabit the inanimate objects—in this case, banks. “Zombie Banks” are described as “insolvent financial institutions whose equity capital has been wiped out so that the value of their obligations is greater than their assets.” These are banks that have bankrupt balance sheets, and are kept alive by governments in the hope of avoiding financial and economic collapse.

There are costs to this government life support. One of them is very low interest rates. As Onaran concludes, "Savers are being ripped off as interest rates are being kept at zero. The hard working and thrifty are being forced to finance the reckless and foolish. The good and true support the wicked and the profligate.” Another cost the author notes is that zombie banks will gamble to quickly regain profits, rather than invest in sound economic recovery.

Clearly the author favors letting these banks fail and having them restructured; he sees this as the essential start of true economic recovery. Saving these banks, Onaran describes, will continue to fail repeatedly. There will be a lot of disagreement on this conclusion. For example, many experts who have studied the Federal Reserve's allowance of Lehman to fail see that as a major factor in the financial crisis’ severity. Worse might have followed if the Fed let some of the largest US banks fail.

This book is the best account of the bankrupt banks kept alive by governments. Onaran details a thorough plan to eliminate these failed practices, in an effort to rebuild our economic state. It is a serious analysis of the financial crisis, and brings zombie banking, which Onaran claims is standard operating procedure for big debtor nations, to light. Although these banks are often hidden from public view and awareness, like science fiction zombies, they are lurking around us, and without a sufficient cure they will pounce again.