Franklin National Bank (originally Franklin Square Bank) closed its doors for the last time on October 8, 1974 under some remarkable circumstances. The bank had grown to the 20th largest bank chain in the nation. When it went under it was the largest bank failure in the history of the United States.
The bank had been growing steadily since in creation just prior to the Great Depression. It was one of the more innovative banks in the country and was responsible for the development of: the drive-up teller window, the bank credit card, and outdoor automatic teller machines.
But that was before the mafia got involved. In 1972 Michele Sindona purchased a control of the bank from Laurence Tish in a rigged sale that involved some crooked dealings on both sides. Sindona was known to have ties to the mafia, the Nixon Administration, and a shady Italian masonic lodge. He immediately set up Franklin National as a money laundering operation to complement his dealings with the Vatican Bank and Sicilian drug dealers. He used his influence with the Nixon Administration to ensure his dealings and background did not get too much attention. Sindona began to suffer losses in foreign exchange markets and used money from Franklin to cover his losses. This dropped the bank below the capital it needed to operate. In 1974, Franklin National posted significant losses and a bank run began. Franklin had to borrow $1 billion from the Federal Reserve to cover the increasing withdrawals. On October 8, 1974 the bank was declared insolvent and closed for good.
The banks principal managers were all hit with federal fraud charges. Sindona was eventually nabbed when his attorney Giorgio Ambrosoli provided evidence against him. Ambrosoli was murdered on Sindona’s order in Italy. The Italian Government was able to make murder case against Sindona and he was sentenced to life in prison. He died from cyanide laced coffee two years after his sentence began. It was never proven who killed him. There was speculation that Sindona was involved in the death of Pope John Paul I and that his murder was retaliation for that rumored crime. The plot of the movie Godfather III is believed to be inspired by the actions of Sindona.