The Chicago Tribune reports that one CEO, Cardinal Francis George, is exercising succession planning as he prepares to retire as Archbishop of Chicago in the couple of years. Cardinal George was required to submit his resignation when he turned 75 on January 16, 2012, but remains in office until Pope Benedict XVI accepts George's resignation and appoints a successor.
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| Cardinal Francis George Archbishop of Chicago, 1997- |
What makes this story interesting to The Motley Monk is that Cardinal George isn't looking for or grooming a successor, but instead has turned to Wall Street for assistance to ensure the Archdiocese's long-term financial viability. This may be the "long shadow" Cardinal George casts long after he retires.
But, as interesting as this is, of even greater interest to The Motley Monk is that Cardinal George's succession plan isn't at all novel. In fact, the Cardinal taking a page from the playbook of one of his predecessors, Cardinal George Mundelein, who used bond sales to improve the Archdiocese's cash flow during the Depression. According to the Chicago Tribune article:
Considered one of the nation's top businessmen of the early 20th century, Mundelein financed and created most of the modern archdiocese and earned a reputation much like the Rockefellers and the Vanderbilts. Even at the height of the Great Depression, national media touted that "no one in Chicago had better credit than the cardinal."
Mundelein was reputed to be one of "God's bricklayers."
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| Cardinal George Mundelein Archbishop of Chicago, 1915-1939 |
News revealing Cardinal George's succession plan emerged when the Archdiocese earned an A1 rating from Moody's, an announcement that typically precedes a bond offering. In this case, the Archdiocese is proposed offering $151.5M in bonds. However, with Securities and Exchange Commission regulations precluding any discussion of a potential bond sale, the Moody's rating does not guarantee a sale.
The Moody's report indicates that the bond sale proceeds would be used to refinance $75 M in loans used to pay for parish operations and sexual misconduct costs. Those loans were collateralized through the sale of undeveloped property, insurance proceeds, other reserves, and loans. The bond sale proceeds would also replenish reserves used to cover $42M of capital expenditures.
That said, Cardinal George told the Chicago Tribune that he would like
...to take advantage of historically low interest rates and the good creditworthiness of the Archdiocese.
Rather than borrow directly from banks...it might be advantageous to float bonds and pay them back on a regular basis, which is what a lot of corporate entities do.
There's a conversation going on about whether or not the Archdiocese should at this time do something that Cardinal Mundelein first did, meaning float private bonds to cover debts.
The President of O'Meara Ferguson Whelan and Conway, the financial firm hired by the Archdiocese to facilitate fundraising and investment strategies, Patrick O'Meara, said of Cardinal George's succession plan:
He's leaving Chicago in the best position it's ever been in recent memory. His legacy is going to be in many ways. One way is he wants the temporal affairs to be really solid.
Given the precarious financial situation confronting most dioceses in the United States, The Motley Monk wouldn't be surprised to see other diocesan CEOS---bishops, archbishops, and cardinals---taking the same page from Cardinal Mundelien's playbook as part of their succession planning process.
Let the discussion begin...
To read the Chicago Tribune article, click on the following link:
http://www.chicagotribune.com/news/local/ct-met-archdiocese-finances-20120129,0,1116500.story
I believe that George has been a responsible financial caretaker for the archdiocese. I understand we were heavily invested in Enron and, like everyone else defrauded by those swine, got killed when it went under. Liberal Pilgrim
ReplyDeleteIt is not the fault of Cardinal George that Catholics have left the Archdiocese, traditional families cannot afford the cost of Catholic Schools, there is no more 'slave-labor' in the form of the good Sisters or the current state of the stock market. And, oh by the way, no one knows the millions lost on abuse settlements.
ReplyDeleteIt seems to me that many overlook the best source of financing, which is God. It requires a large dollop of faith, which seems scarce among our bishops. The chief method is prayer.
ReplyDeleteCurious how our impoverished grandparents were able to build churches and schools with nickels and dimes. Curious how the present generation of ecclesiastics has so little faith in their flocks.