The global financial crisis started much earlier for me than for most other people. I was a finance journalist covering Bear Stearns and Lehman Brothers for Bloomberg News. The problems at Bear Stearns surfaced in June 2007, and the bad news didn’t let up for one minute until the Wall Street firm’s demise in March 2008. Then, just as at a relay race, Bear Stearns handed off the baton to Lehman Brothers—the day Bear’s history ended, attention turned to Lehman as the next to go down. Without skipping a beat, I also turned my attention to the bigger investment bank as its final chapter unfolded in the next six months. Even though, for much of the world, the global financial crisis started in September 2008 with the collapse of Lehman Brothers, for me it had been going on for about 15 months by then, and I was already wiped out from working around the clock. However, because the two firms I was tasked with covering were both dead, I had a unique opportunity as well: When my colleagues reported on the global financial system freezing up, I could stop and look back at what had happened to two financial giants that had each been around for about a century.

As I delved into what had gone wrong at both firms, the biggest discovery I made was that nobody completely knew what was going on inside either bank. Every executive I talked to knew one chunk of the business really well and perhaps had some fleeting sense of a few other related departments, but none, including those at the very top, could connect all the dots. I felt as though I was talking to blind men trying to describe an elephant—each was holding a different part of the animal, so one described it as snakelike, another as a sturdy pillar, somebody else as flapping ears. Nobody saw the whole beast. This realization came back to haunt me as I started looking into the attempts at regulatory overhaul in the United States and globally. I kept discovering that bankers, analysts, investors, regulators, and politicians all held some part of the elephant, but there seemed to be nobody with the full picture. That made rewriting the rules of the game very difficult as it had made running Bear Stearns or Lehman Brothers successfully almost impossible. The financial system had become so complicated that no one had all the answers. The complexity had forced everyone—including journalists like me—to become experts in one small aspect of the system while forgetting the bigger picture.

This book is an attempt to connect the dots that are scattered all over the financial landscape—to bring the full animal to life. There are common threads running through the European and U.S. financial realms, and the unresolved troubles of the banking system affect everyone. Irish readers probably won’t be shocked to read the stories about their own country, but will be surprised to see the similarities with the other countries and how they all relate to one another.

While there’s a historical element throughout the book in explaining how we got into the situation we are in, it’s mostly about what the current predicament is and what should be done so we can get out of it. The book comes out as the European Union wrestles with its troubled periphery and the United States with its crippled housing market. It will help make sense of those issues and uncover the solutions. It would be great if I could guide some of the policymakers toward the right solutions. However, even if I can only get some of the public informed well about them, then I can count on the pressure they’ll exert on the politicians to do the right thing.

People with no finance background can pick up this book and read it without difficulty. I tried to emulate the way I explain these same issues to my closest friends during private conversations, and most of them don’t have any financial expertise. I tried to avoid technical terms and financial jargon, and explained even the most basic term if I had to use it. Yet there’s something for the finance professional in this book too. The trader reading Zombie Banks may already know the issues directly relating to his line of business but will benefit from seeing the correlations and similarities, just as the lay reader will.

The first two chapters explain the main concept of zombie banking and put it in historical context, especially how it led to Japan’s lost decade of the 1990s. The next four chapters are about Europe’s problems—its bankrupt states and broken banks, how they relate to each other. Chapter 3 looks at the debt problems of the European Union (EU) periphery—Greece, Portugal, Ireland, and Spain—and how that is connected to the banks’ weaknesses in other countries. Chapters 4 through 6 analyze the banking systems of Germany, Ireland, and Iceland one by one. You may be surprised to see the strongest and most powerful European country in the same list with the weakest and smallest, but you will be even more shocked to read about the similarities in their banks’ problems. Although I have focused on these three countries’ banks, that doesn’t mean they’re the only ones with zombie banks, or in Iceland’s case, the only example of how to get rid of them. I would have also liked to delve into the French and Italian banking systems, spend more time on Spain’s savings banks, and study Belgium’s largest bank, the most highly leveraged lender on the continent; I just ran out of time. Making sure this book remained topical and current meant I couldn’t spend many more months expanding my research into more troubled banks in other countries. Germany, Ireland, and Iceland provide the best examples to the phenomenon though.

The following three chapters are about the United States. Chapter 7 looks at the U.S. zombies; Chapter 8 highlights the political fights over how to prevent the next financial crisis; Chapter 9 builds a bridge between housing-market woes and the banks. In the last two chapters, the perspective is global. Chapter 10 zooms in on the dangers of derivatives and too-big-to-fail financial institutions, and Chapter 11 suggests solutions to the problems identified throughout the book. Each of these chapters is sprinkled with entertaining and telling stories of bankers, politicians, bureaucrats, firms, and nations.

To get to those stories and understand the national psyche of these different peoples, I traveled to Ireland, Iceland, and Germany in late 2010 and early 2011. I interviewed dozens of people in those countries, as well as many others in the rest of Europe and the United States. Almost everything in quotation marks comes from those interviews, except for a few cases in which I cite a newspaper column or research paper where the view was expressed. There are also dozens of people I talked to whose names aren’t mentioned in the book; they requested anonymity for various reasons, and I respected that, as all journalists do. Many of the behind-the-scenes stories come from those unidentified sources. In the spirit of Bloomberg News guidelines on such material, if I couldn’t reveal the source, I only used the stories that I heard from at least two different people.

Even though I talked to some 100 people for this book and cite many of their views throughout, when there’s no attribution, the views expressed are mine. When I interview people for Bloomberg News articles, I like to joke that as a reporter I have no views—I only parrot the views of others I’ve talked to. There’s a sliver of truth to that in the sense that the dozens and hundreds of perspectives I’m consistently exposed to as a reporter form my views. My views about zombie banks are derived from everything I’ve heard and read in the past 14 years as a financial journalist, covering multiple financial crises in various countries, in addition to the research I did specifically for the book. Although as a reporter I shy away from reflecting my own viewpoint in the articles I write, in this book I did not pull any punches. I hope you enjoy that too.

I would like to thank a few people who helped make this book better. Constantin Gurdgiev, Adriaan van der Knaap, Frederick Cannon and my editor at Bloomberg News, Robert Friedman, were kind enough to read the whole manuscript and provide valuable feedback. Evan Burton at John Wiley & Sons was instrumental in making it happen, and Meg Freeborn was a great editor to work with. I’m grateful to the dozens of editors I’ve worked with at Bloomberg in the past 14 years who’ve helped me become a better reporter and writer. Our editor-in-chief, Matthew A. Winkler, has inspired me to doggedly pursue the truth every time.

There have been many books about how the crisis unfolded and what caused it. This one is to show that despite their claims to the contrary, politicians worldwide have not tackled the structural problems in the financial system underlying that crisis. When you read this book, I hope you can connect the dots between the street protestors in Greece, strikers in Spain, the $4 gas at the pump, and your unemployed neighbor in Alabama. We haven’t fixed our banks, and that will prevent us from moving away from these troubles.