How a Bank Bought a Papacy and Broke Itself

This article records tradition as it has been passed down and reported. Its sources are not yet part of the atlas's verified catalogue.

The same closeness to power that made the Medici Bank rich eventually helped ruin it. De Roover's account documents how the Bank's branches increasingly extended large, poorly secured loans to European rulers, most damagingly the English crown under Edward IV and various Burgundian dukes, credit extended partly for ordinary business reasons and partly because the Medici family had become Florence's de facto political rulers and used the Bank's resources to buy influence, including support for favoured candidates in Papal elections and Church politics more broadly. When royal debtors defaulted, as the English crown notoriously did, individual branches took losses the semi-independent partnership structure was supposed to contain, but bad management by branch managers appointed more for loyalty than competence, especially at the London and Bruges branches in the Bank's later decades, let losses compound rather than stay isolated. Political instability in Florence itself, including the Medici family's temporary expulsion in 1494, removed the political protection that had shielded the Bank from the consequences of its own overreach. By the last years of the fifteenth century the Bank that had once financed Popes and financed the Medici's own rise to power in Florence collapsed under debts it could not collect and losses it could not contain, a cautionary case study, in de Roover's reading, of a financial institution that let political ambition outrun banking discipline.