Vatican Bank may be too corrupt for Pope Francis to save: Posner

The Vatican Bank is one of the most mysterious institutions in the world. The completely independent financial institution is run by the Catholic Church, and until 2013, had never released so much as a financial report.

Pope Francis is finally attempting to shed some light on the fabled bank.  Under his watch, investigators have closed more than 3,000 suspect accounts, long-standing bank officials have been fired and the institution now serves only Catholic institutions, clergymen and diplomats within the Vatican. The pope even reportedly considered closing the bank after a scandal in January of 2014 where Msgr. Nunzio Scarano, then-accountant for the Vatican’s real estate holdings, was arrested for attempting to use the bank to smuggle and launder millions of Euros. 

In his book, “God’s Bankers: A History of Money and Power at the Vatican,” investigative journalist Gerald Posner, who was raised Catholic, dives deep into the shrouded history of the Vatican Bank. That history includes sordid stories of financial alliances with Germany during World War II, and Italian mobsters in the 1980s.

Prior to 1942, the Vatican handled its money elsewhere but during WWII decided it needed its own bank. “Why did the Vatican need a central bank all of a sudden?” Posner asks. “It needed it because the Americans and British were trying to stop money going to Nazi Germany, and the Vatican knew that. It wanted to play both sides of the game by making money with the West and making money with the Italian and Germans, and the only way to do that was to have its own bank.” He alleges that the Vatican Bank would knowingly invest in companies through Italian proxies that would steal money from Holocaust victims.

Get the Latest Market Data and News with the Yahoo Finance App

Posner believes that Pope Francis is the “real deal,” and that he’s certainly reforming the bank and applying EU transparency rules as best he can. But Posner says the main question is whether Pope Francis will apply this transparency to the history of the bank, “meaning will he go back and open up the Holocaust files about the Vatican Bank so that historians and investigators can see the extent of their involvement?”

Posner firmly believes that there is no way the bank would ever consider reparations to the families of Holocaust victims. “When it comes to giving out money, the answer is always ‘no’,” he says. “Even with this pope.” In the 1990s, there was a push for restitutions by Holocaust survivors against insurers and companies who had engaged in using Jewish slave labor. “The Vatican was the only entity that refused to open up its files or to cooperate or to give a dollar,” says Posner.

A reason that the U.S. was never very upset with the unethical practices of the Vatican Bank, says Posner, is because it also cooperated with the CIA in an alliance against communist countries. He claims that the Polish pope, John Paul II, funneled millions of dollars through the Vatican Bank covertly back to Poland to fund the revolution.

Posner says that there is no real need for the Vatican Bank, and that the Vatican could easily handle its finances through correspondent banks. “Remember this is a bank that doesn’t give out any loans, it doesn’t have to turn a profit by its own charter,” he says. He calls the bank an “offshore bank in the middle of Rome.” Wealthy Italians would only have to find one priest willing to deposit their money in the bank and Italian authorities wouldn’t know about it.

Watch the video above for more about the history and culture of the Vatican Bank.

More from Yahoo Finance

Don't fear the retailers: Bankruptcy woes weeding out the weak

Sonders: Still a bull but "more angst" about stocks

Investors Are Fleeing The Largest ETF Near Its High