For decades, the Catholic Church has been dogged by scandals involving money. The Vatican — a sovereign country — controls its own finances through the Vatican Bank. It developed as a cross between the Federal Reserve and an offshore bank. In a new history, God’s Bankers, Gerald Posner explains that its roots go back to the mid-19th century.
“They had 15,000 square miles of what was central Italy with thousands of subjects,” Posner tells NPR’s Renee Montagne. “They levied taxes and paid for this lavish lifestyle — with 700 servants and a big and growing bureaucracy around them. Then, in 1870, Italy’s nationalists have a revolution they throw the Pope out they get rid of the papal states. The Vatican goes from being an empire — an earthly empire — to a little postage stamp size of property called Vatican City.”
By World War II, the church had sizeable investments and created the Vatican Bank in order to hide its financial dealings with the Nazis from the U.S. and Britain.
“I was surprised to the extent to which the Vatican was deeply embedded with German companies,” Posner says. “They bundled together life insurance policies of Jewish refugees who had been sent to Auschwitz and other death camps. They escheted these policies early on — meaning they took the cash value of them.”
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