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Yahoo! My Yahoo! Mail Yahoo! Search Search: Sign InNew User? Sign Up News Home - Help Navigation Primary Navigation Home Singapore Asia Pacific World Business Entertainment Sports Technology Top Stories Most Popular Secondary Navigation Asia Pacific World Search Search: Cash-strapped US art owners hit the pawnshop AFP - Friday, September 11 WASHINGTON (AFP) - - Famous artists and high-end art collectors are joining a litany of victims from the crippling US recession, pawning some of their most valuable works in exchange for much-needed cash. ADVERTISEMENT As the stock market plunged, banks tightened their lending standards and home values or equity dropped, that dusty Old Master or that forgotten Andy Warhol print suddenly became important collateral for a growing number of art owners. "There's a lot of leverage in the market and part of the reason is that people have already taken out their mortgage on their home, so they look at other asset classes -- what's on their walls -- as something they can use," Meghan Carleton, a banker at Art Finance Partners, told AFP. The company is one of several lenders specialized in this relatively unknown part of the art business. The lenders' customers form an unlikely blend of wealthy collectors such as Veronica Hearst, art galleries, museums and famous artists like photographer Annie Leibovitz and artist-filmmaker Julian Schnabel. Some of the loans have ended in litigation nightmare. In what now appears as a disastrous decision to raise funds, Leibovitz took a 24-million-dollar loan from Art Capital Group in December 2008 using her own famous photographs and a string of luxury properties as collateral. Defaulting on her debt could see the star photographer lose her life's work. She missed a Tuesday deadline to repay the loan but is reportedly in talks with her creditors. But if she cannot work out a deal, Leibovitz, 59, may file for bankruptcy, which would protect her assets until a court decides how to proceed. Art Finance, which keeps the properties housed at its warehouse, provides loans of at least one million dollars and charges interest rates ranging between 12 and 18 percent. Each loan is issued for up to 50 percent of the work's value. Since October, Carleton said, the company has seen a 50-percent increase in its business, as both new customers and old ones with fresh works flocked to her offices with art, but also collectibles and antiques. Another New York-based lender, Emigrant Bank Fine Art Finance, provides loans as large as 100 million dollars, usually lending up to 50 percent of the value of the collateral. Ray Parker Gaylord, whose San Francisco company deals with smaller loans and charges 18 to 24 percent interest, said monetizing valuables could ultimately boost the art market as buyers view works as bankable assets. "A large amount of people we have been working with have been borrowing money to take advantage of the marketplace and the current economic downturn," said Gaylord, executive vice president of ArtLoan Financial Services. One ArtLoan customer borrowed against his stamp collection to buy Bank of America stock when it was just two dollars a share, later making a huge profit when he sold the shares for 15 dollars each when the market went up. What makes the rich and famous teeter on the verge of bankruptcy? "The sense of denial that there is a problem in handling money is higher among higher-indebtors," said Jerrold Mundis, a debt counselor who has advised celebrities. "They have a greater sense of entitlement. They may consider themselves as the blessed ones or the specially gifted." Cash-strapped Hearst, whose late husband was the heir to the massive Hearst Corporation media conglomerate, pawned some of her most valuable artworks in an ultimately failed bid to keep her 52-room mansion in Manalapan, Florida. Schnabel, meanwhile, used his extravagant Palazzo Chupi apartment project in New York as collateral for an Art Capital loan. Financial travails are no novelty to artists, many of whom remain impoverished even if their work gains posthumous fame. Among the best-known examples is Vincent Van Gogh, who took to self-portraiture because he lacked the money to pay models. Although he died relatively unknown and in poverty, Van Gogh's works eventually joined the ranks of the most famous and expensive in the world. Artists also seem prone to making financially disastrous decisions, like Native American folk legend Buffy Sainte-Marie, who once gave up rights to her ubiquitous song "Universal Soldier" for a dollar. Ten years later, she bought them back for 25,000 dollars. Others garnered success in their dealings, such as British rock star David Bowie's "Bowie Bonds," issued in 1997 for a 10-year term. The asset-backed securities of royalties from the singer's first 25 albums earned him some 55 million dollars. Email Story IM Story Printable View Blog This Sign in to recommend this article » 0 users recommend Related Articles: Entertainment & Lifestyle Broadway musical in the works about WoodstockAP - 1 hour 59 minutes ago Win a chance to sit alongside Oscar's red carpetAP - 2 hours 13 minutes ago Jay Leno has the buzz, but will viewers respond?AP - 2 hours 15 minutes ago Dancers Karina Smirnoff, Maksim Chmerkovskiy splitAP - 2 hours 56 minutes ago BC-US--Best Sellers-Books-USATodayAP - Friday, September 11 Most Popular – Entertainment Viewed Greenspan says further financial crisis 'inevitable' Refurbished Hubble reveals cosmic wonder Giant statues reveal red hat secrets: study OPEC holds oil output unchanged: statement Anti-piracy equipment dazzles defence fair View Complete List » Search: Home Singapore Asia Pacific World Business Entertainment Sports Technology Top Stories Most Popular Copyright © 2009 Yahoo! Southeast Asia Pte Ltd. (Co. Reg. No. 199700735D). All Rights Reserved. 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