In the hours after a powerful fertilizer bomb blew up the Alfred P. Murrah Federal Office Building on April 19, 1995, killing 168 people, the U.S. government mounted a massive manhunt—for Islamic terrorists. Three Arabs were supposedly seen fleeing the scene. Cable news shows, fed by tips from a former CIA official, reported that the bombing may have been the work of Saddam Hussein.

The FBI would no doubt have been looking for suspicious Arabs for some time—and likely would have locked up a few—had it not been for a sharp-eyed Oklahoma state trooper named Charlie Hanger. That same day, Hanger pulled over a beat-up Mercury Marquis with no license plates cruising down a highway headed to Kansas. When the driver, a fresh-faced Army vet with a Glock pistol, inexplicably got out of the car, Hanger ordered him to lift his hands and pointed his gun.

"My weapon is loaded," the driver, Timothy McVeigh, told Hanger. "So is mine," shot back the trooper.

The story of the Murrah building bombing receives its most comprehensive accounting yet in Oklahoma City: What the Investigation Missed-and Why it Still Matters—a new book by journalists Andrew Gumbel and Roger G. Charles. It is a cautionary and at times startling tale, filled with bizarre characters from the outer fringes of American political life, with continuing relevance today. The feds certainly had legitimate reason to be worried about Islamic extremists in the mid-1990's. But there was an equally menacing threat that was being largely ignored by federal law enforcement, a resurgent movement of loosely connected extremist hate groups, Christian Identity fanatics, and gun-toting militia members, all convinced that American liberty was in grave peril.

As Gumbel and Charles amply document, U.S. law enforcement had plenty of warning signals that these groups were planning violent attacks—and even that the Murrah Building itself might well be one of the targets. One of the movement's most charismatic leaders, a white supremacist Arkansas death-row inmate named Richard Wayne Snell, had plotted to blow up the Murrah building years earlier. Snell, a convicted double murderer fond of quoting Rudolf Hess, had warned prison guards there would be "hell to pay" on April 19, his execution date. One of Snell's most devoted acolytes, Louis Beam, also talked about "something big" that would take place that day—which was also the anniversary of the FBI assault on the Branch Davidian compound in Waco, Texas. This law-enforcement debacle had become a rallying cry for the far right, but for reasons ranging from bureaucratic rivalries to political timidity, few in Washington were paying any attention.

Timothy McVeigh was a product of this far-right subculture, a brooding sociopath who, as an army gunner, relished mowing down surrendering Iraqi soldiers during Operation Desert Storm. After leaving the military, McVeigh hit the gun-show circuit, where he tried to earn money selling blast simulators, smoke grenades, and copies of his favorite book, The Turner Diaries, a virulent screed that celebrates the fictional efforts of a group of valiant race warriors who blow up the FBI building in Washington, D.C. It was on the gun-show circuit that McVeigh went into business with Terry Nichols, his hapless convicted confederate who ultimately helped him assemble the bomb that destroyed the Murrah building. (Nichols always denied prior knowledge of exactly what McVeigh had in mind.) It was also at an Arizona gun show in the spring of 1993 that McVeigh met Andreas Strassmeir, one of the more intriguing stealth characters in this tale. Strassmeir, a German citizen, was the grandson of one of the founders of the Nazi Party (his membership card number was lower than Hitler's.) Strassmier was then serving as chief of security at Elohim City, a cultish compound of racist oddballs in the remote hills of eastern Oklahoma City whose leader, Robert "Grandpa" Millar had been Snell's "spiritual adviser." Strassmier gave McVeigh his business card and phone number and invited him to stop by anytime. The biggest question that continues to hang over the Oklahoma City bombing is whether McVeigh was freelancing—or whether he was part of a broader conspiracy that extended beyond Nichols.

For all their painstaking research, Gumbel and Charles can never quite answer this question. (For his part, McVeigh, until his death by lethal injection in 2001, always insisted he was acting alone.) More than two dozen witnesses described seeing McVeigh in the months before the bombing with a mysterious stocky character who looked vaguely like an American-Indian and was identified by the FBI as John Doe Number 2. But nobody ever found him and federal officials ultimately explained away the eyewitness reports as unreliable or confused. Some of the FBI's top investigators were never satisfied.

"If only one person had seen it, or two or three ... but 24?" former FBI veteran Danny Coulson told the authors. "Twenty four people say, yes, I saw him with someone else? That's pretty powerful."

McVeigh's telephone calling card shows he called Elohim City on April 5, just two weeks before the Murrah bombing. Did he ever visit? Was anybody at Elohim City involved?

What we do know is that the feds had ample reason to be closely monitoring events at the compound—and never did. Carol Howe, a former Tulsa debutante and undercover federal informant, had reported to her handler that there was talk about "assassinations, bombings, mass shootings" by Strassmier and others at the compound. (Howe had gained Strassmier's confidence by flashing the inky blank swastika tattoo on her shoulder.) But Howe worked for the Bureau of Alcohol, Tobacco, and Firearms—an agency at virtual war with Louis Freeh's FBI. The two agencies barely talked, much less shared intelligence about the radical right. A month before Oklahoma City, the ATF cut Howe off, concluding she was unstable, and a pipeline into Elohim City dried up. Before the bombing, the ATF never told the FBI about what it knew about Elohim City. "Shame on them. In upper case—SHAME ON THEM," Danny Defenbaugh, the FBI agent who ended up overseeing the Oklahoma City bombing investigation, told the authors. Yet the Bureau had its own intel about Elohim City and never followed up either. Especially after Waco, the political risks of delving too deeply into the radical right were too great. "Everybody just walked in fear of domestic-terrorism cases," Horace Mewborn, another former bureau official told the authors. "They were positive they were going to blow up in their face."

In the years since Oklahoma City and especially after Barack Obama's election, the radical race hatred and anti-government paranoia that infused McVeigh continues to thrive—on Internet chat rooms, in militia hideouts, and at obscure rural compounds like the one that was at Elohim City. Three years ago, a Homeland Security intelligence analyst wrote a scary report warning that right-wing extremist groups were making a comeback and needed to be more closely tracked.

Conservative critics in Congress were outraged, accusing Homeland Security of preparing to monitor American citizens exercising their constitutional rights. Homeland Security scrapped the report and the analyst, Daryl Johnson, soon left his job, only to pop up in the news again last year when a demented anti-Muslim fanatic in Norway blew up government buildings and shot scores of children at a Labor Party youth camp. It was the worst act of terrorism in a Western country in recent years. Such killings "could easily happen here," Johnson told reporters.

As Gumbel and Charles remind us, they already have.