The Costs Of Penance

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And that's the point. Catholic officials say the money was meant to provide therapy and support for victims. But the underlying purpose seems to have been to keep things quiet and thus discourage more victims from coming forward. Now that the silence has been broken, dioceses across the country face mountains of debt, even bankruptcy. The Vatican stands aloof at pay-up time; every diocese is responsible for its own financing. That drove the Santa Fe, N.M., diocese to the brink of insolvency, when it had to borrow from parish savings accounts to fill out a $50 million settlement. The diocese of Santa Rosa, Calif., sold off property, closed an elementary school and took out $7 million in loans from 90 other U.S. dioceses to pay $16 million to abuse victims.

Most dioceses pray their insurance will cover the costs, but that's unlikely. All dioceses carry general negligence and liability coverage, but that basic policy, underwritten by commercial companies like Kemper and Lloyd's of London, doesn't begin to cover settlements the size of Boston's. Commercial insurers have recently started to balk at paying claims if they can prove church officials knew about the abuse and failed to stop it. Most dioceses also insure themselves through a Catholic self-help pool to which they contribute healthy annual premiums. Sometimes nicknamed "the Bishop's Program," this extra insurance often provides the cash payments that church authorities use to conceal their priests' wrongdoings.

In Boston the diocese admits the remnants of its insurance won't equal the settlements already negotiated, much less new ones. Bernard Cardinal Law, under fire for years of covering up parish priests' sexual misconduct, has vowed not to raid collection plates, bingo nights or the church's ambitious $300 million capital fund-raising effort. Instead he's leaning on wealthy donors to float a special $25 million sex-abuse fund, looking at well-to-do lay fraternities like the Knights of Columbus for loans, and itemizing the properties in the church's rich portfolio that he can sell. Topping the list: the Archbishop's elegant residence. But press reports suggest the Boston church has been steadily selling off chunks of its stocks and bonds during the past five years to offset shortfalls in its operating expenses--the same period during which the diocese was making hefty secret payments to abuse victims.

In the end, says Florida attorney Sheldon Stevens, who has handled 75 abuse cases, "there is no source I am aware of that doesn't come, bottom line, from parishioners." And that's the biggest peril facing the church: shaken Catholics may have to decide whether they want to spend much more of their money to bring the church out of moral bankruptcy.

--With reporting by Matt Kelly/Boston and Siobhan Morrissey/Miami