A couple of weeks after Cardinal Angelo Becciu, second-in-command of the Vatican’s powerful Secretariat of State, resigned amid burgeoning financial scandals, another scandal has emerged, this time it involves the Vatican using some donation money, intended to help the working poor, to bet on the creditworthiness of now bankrupted US rental car company, Hertz.

FT broke the story on Thursday, citing documents, shows how the Vatican, under Becciu’s management, used donation money to purchase structured notes linked with credit default swaps as part of a gambling bet Hertz wouldn’t default by April 2020. Hertz filed for bankruptcy on May 22, due to the economic downturn spurred by the virus pandemic, which allowed the Vatican to “narrow escape on the investment, which paid out in full,” FT said. 

In 2018, the Pope, highly critical of global capitalism or mostly unfettered capitalism, warned about the dangers of the CDS market, and its role in the 2008 financial crisis. He specifically warned about the bundling and re-bundling of CDS products into structured debt.

“It is obvious that the uncertainty surrounding these products . . . makes them continuously less acceptable from the perspective of ethics respectful of the truth and the common good, because it transforms them into a ticking time bomb ready sooner or later to explode, poisoning the health of the markets,” Pope Fancis said in a 2018 statement.

FT said there was no evidence that suggests the Pope knew about the Hertz investment, which was held in an account in Switzerland and made by a third-party. This comes after Becciu resigned from his position last month following an allegation of “misappropriation“.

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The Pope was out last Sunday, blasting trickle-down economic policies, raising the alarm over the rapidly increasing inequality crisis that has been exacerbated by the virus-induced global recession. 

“The marketplace, by itself, cannot resolve every problem, however much we are asked to believe this dogma of neoliberal faith,” the Pope said in a letter to church leaders. “Whatever the challenge, this impoverished and repetitive school of thought always offers the same recipes.”

Before bashing financial markets, maybe the Pope should review the Vatican’s portfolio before making statements about credit and debt products. 

Via Zerohedge