‘Pope’s Banker’ to Lose Job in Economic Restructuring

Times Staff Writer

The financially strapped Vatican announced a record budget deficit here Thursday and an economic reform that will cost the job of a controversial American archbishop who has been known for two decades as “the Pope’s banker.”

Reporting a projected 1989 budget deficit of $78.2 million, a commission of cardinals appealed for “every effort to reduce costs.” The 15 cardinals, who include John Krol of Philadelphia and John J. O’Connor of New York, meet twice a year to oversee modernization of the complex 2,366-member Vatican administrative apparatus called the Holy See.

As part of an administrative overhaul outlined by Pope John Paul II last June, the Vatican bank, called the Institute for Religious Works, is being restructured.

“I will probably move on when it’s all set up,” Chicago-born Archbishop Paul C. Marcinkus, the institute’s president, told reporters as the Vatican disclosed a long-mulled streamlining of a bank scarred by scandal.


A Milan prosecutor issued warrants in 1987 for the arrest of Marcinkus, who has headed the bank for 20 years, and two lay bank officials, accusing them of being accessories in the fraudulent bankruptcy of Banco Ambrosiano, which collapsed in 1982. Last year, ruling that Italy had no jurisdiction over Vatican affairs, an Italian court annulled the warrant against the 67-year-old Marcinkus, himself almost a Vatican institution.

Under the reform announced Thursday, the Vatican bank, which denied wrongdoing but paid $250 million to Ambrosiano’s creditors in recognition of its moral responsibility in the collapse, will get new leadership and closer supervision by a watchdog commission of five cardinals.

Marcinkus’ post as president will be abolished. In the new structure, a lower-ranking cleric will oversee the bank as secretary, aided by a supervisory council of five lay financial experts.

In announcing the reform, Vatican Secretary of State Cardinal Agostino Casaroli said Marcinkus will remain at his post to assist with the transition, which is expected to take several months.


The personable Marcinkus, an avid golfer and sometime papal bodyguard, will remain at the Vatican--and may move from vice president to president of the Vatican city-state, the church’s independent 108-acre territory surrounded by Rome.

The city’s administration is in the black, but the church administration, called the Holy See, is drowning in red ink. A 1988 deficit of around $65 million will grow to $78.2 million for the 1989 fiscal year, the cardinals said, anticipating revenues of $56.1 million and expenditures of $134.3 million.

A large part of the increased deficit, the cardinals said, came from inclusion in the budget of the $10.1 million cost of maintaining the Vatican’s 118 diplomatic missions aboard. Previously, they had been funded by special monies now exhausted, the cardinals said.

To meet its bills, the Vatican has in recent years relied on a yearly collection in churches around the world called Peter’s Pence, which was originally intended as a fund to be at the Pope’s disposal. Last year the collection grew 5.5% to $52.9 million, the Vatican reported.