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Goldman Bails Out Steve Cohen (Again) With Art-Backed Loan

Tyler Durden's picture




 

It seems Goldman Sachs is willing to do pretty much anything when it comes to maintaining SAC Capital (now Point72) Steve Cohen's liquidity. On the heels of last year's "stand by your man" moment in the midst of the insider-trading scandal, Goldman has kindly offered to provide Cohen another lifeline of liquidity - this time backed by his $1 billion art collection. As Bloomberg reports, Cohen pledged “certain items of fine art” under a security agreement which didn’t specify how much money was borrowed. As one art "investor" noted, this is not unusual, "hedge fund guys who manage their money wisely... look to put their art collections to work... If you can get liquidity out of your collection and pay only 250 basis points...it just makes sense." Sense, indeed!

As Bloomberg reports,

Goldman Sachs, which stood by Steven A. Cohen last year as his SAC Capital Advisors LP bore the brunt of a massive insider trading probe, has come to the billionaire’s aid again.

 

The top prime broker to the former hedge-fund firm, Goldman Sachs is making a personal loan to Cohen for the first time, according to a regulatory filing, joining the list of banks that have provided SAC’s founder with credit lines backed by his $1 billion art collection.

 

...

 

“Goldman is opportunistic about these things,” said Ian Peck, the head of Art Capital Group, a New York-based firm that provides loans secured by artwork.

 

...

 

Goldman Sachs Bank USA, parent to the firm’s private bank for the very rich, filed a notice with the Connecticut Secretary of the State reporting that Cohen had pledged “certain items of fine art” under a security agreement dated Feb. 28, which didn’t specify how much money was borrowed.

 

...

 

“A number of hedge fund guys who manage their money wisely, they look to put their art collections to work,” Plummer said in a telephone interview. “If you can get liquidity out of your collection and pay only 250 basis points,” Plummer said, “it just makes sense.”

But Why?

Goldman Sachs’s Cohn described SAC as a “great counterparty” last year on CNBC, after the hedge-fund firm was indicted by prosecutors.

 

...

 

“In my experience, Goldman is not one of the usual sources for art loans,” said Thomas C. Danziger, a New York attorney lawyer who represents financial institutions that are making art loans. “It’s not their bread and butter.”

 

...

 

“Its sort of the last non-transparent business and non-regulated business, which of course Goldman has thrived on in all these years,”

Because - art is not correlated right? not all prices can drop at the same time, right?

Of course, from Goldman's perspective they get his business - and are perhaps more than willing to accept only 250bp on the basis that central banks won't stop printing and super-wealthy assets will continue to rise... (or maybe they just want to be first in line when Cohen implodes?)

 

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Tue, 05/06/2014 - 13:27 | 4732474 DoChenRollingBearing
DoChenRollingBearing's picture

Picassoz and Chagallz, fishez!

Tue, 05/06/2014 - 13:36 | 4732514 cifo
cifo's picture

If you put your art collection to work, how do you enjoy it? (I guess they take it away from you, to actually "perform" the work.)

Tue, 05/06/2014 - 13:37 | 4732521 negative rates
negative rates's picture

Did Cashin cash in some of his money.

Tue, 05/06/2014 - 13:47 | 4732530 TruthInSunshine
TruthInSunshine's picture

Whisper Rumor that Goldman had Stevie's Darryl Strawberry rookie card appraised at 50 million dollars, alone, and accepted this FMV valuation in return for assignment of security interest.

Tue, 05/06/2014 - 13:54 | 4732598 Jlasoon
Jlasoon's picture

I have a $10 piece of fine replicated Chinese made Ikea "Binggg Bonggg" art. Does that count?  

Tue, 05/06/2014 - 16:12 | 4733313 Matt
Matt's picture

"If you put your art collection to work, how do you enjoy it? (I guess they take it away from you, to actually "perform" the work.)"

No, they only take it from you if you default. Just like your house, or any of Enron's assets they borrowed against but retained use of.

Tue, 05/06/2014 - 13:27 | 4732475 pods
pods's picture

I wonder how much GS would loan me based on my kids art collection?

These "guys" live on leverage and only survive because they are right next to the money spigot.

They are like that pink bacteria that grow in the shower.

pods

Tue, 05/06/2014 - 13:31 | 4732496 fonzannoon
fonzannoon's picture

I guess cohen prefers art over gold.

Hey Tyler where is the big scary chart of the DXY with "the reserve currency does not last forever" graph below it? It's getting late early.

Tue, 05/06/2014 - 13:35 | 4732511 Soul Glow
Soul Glow's picture

Stocks are down and so is the dollar - and it's Tuesday.

Tue, 05/06/2014 - 13:37 | 4732526 fonzannoon
fonzannoon's picture

the musical chairs are about to stop. the tide is receeding and we are about to find out who is swimming without 30yr UST's.

Tue, 05/06/2014 - 13:47 | 4732569 Winston Churchill
Winston Churchill's picture

Change of heart Fonz ?

Tue, 05/06/2014 - 13:55 | 4732601 fonzannoon
fonzannoon's picture

i am lost Winston. i could see the 10yr breaking down and heading to 2.40%. the interesting thing is I would have guessed that would send the dxy off it's lows and give it a pop. I also remember 2011 when a weak dollar helped earnings for all the U.S companies who made all their money overseas.

i believe the top is in for the year in equities across the board. I also said that this time last year and the bernak made an asshole out of me.

Tue, 05/06/2014 - 14:26 | 4732752 DoChenRollingBearing
DoChenRollingBearing's picture

The Bernank was skilled at making new assholes out of (and on) lots of people.

One of many reasons, fonz, that I only guess now, not predict.  Guessing means that I show that I have NO inside info nor any special insights, just an opinion.  And opinions are as common as, well, assholes!

Count me as dazed and confused too.

Tue, 05/06/2014 - 13:39 | 4732533 Yen Cross
Yen Cross's picture

   Here ya go Fonz. usdx weekly.  I was going to send it over a little later. The 61.8% fibi is right around 79.00. If that goes there's not much below it for awhile.

Tue, 05/06/2014 - 13:41 | 4732543 Winston Churchill
Winston Churchill's picture

Any thoughts on cable ?

Tue, 05/06/2014 - 13:44 | 4732549 fonzannoon
fonzannoon's picture

thanks Yen, that is quite the air pocket under it if it breaks.

Tue, 05/06/2014 - 13:47 | 4732565 Yen Cross
Yen Cross's picture

    Wait to see if the 1.7000 barrier goes. (huge options) There's another big resistance @ 1.7040 and I'm sure more options at the /50 area. I would love to short it but it's a runaway train right now. I'll just wait and see what happens over the next few trading sessions and see.

Tue, 05/06/2014 - 13:51 | 4732590 Winston Churchill
Winston Churchill's picture

Sort of agree. Sitting on pounds ready to switch out into krone.Timing...

Tue, 05/06/2014 - 14:03 | 4732640 Yen Cross
Yen Cross's picture

   Danish or Norweigan Winston?  

Tue, 05/06/2014 - 14:38 | 4732817 Winston Churchill
Winston Churchill's picture

Norweigan.

Tue, 05/06/2014 - 15:20 | 4732998 Seize Mars
Seize Mars's picture

Winston
I was in that trade for a while, sort of like earning interest on Brent crude.

Tue, 05/06/2014 - 13:28 | 4732477 Skin666
Skin666's picture

Squid sucks the life from everything... Cohen is a dead man walking

Tue, 05/06/2014 - 13:38 | 4732529 negative rates
negative rates's picture

How about sleepin??

Tue, 05/06/2014 - 13:55 | 4732604 TruthInSunshine
TruthInSunshine's picture

Goldman expects to get Stevie's REAL black book of insider contacts in exchange for arranging this kick-the-can lifeline, just to ensure they have everyone who knows all the inner workings of every company under contract already.

Tue, 05/06/2014 - 13:30 | 4732485 asteroids
asteroids's picture

I wonder if GS is like the banks and the FED. It just prints money out of thin air and offers credit to SAC and other hedgies.

Tue, 05/06/2014 - 16:26 | 4733377 Matt
Matt's picture

Didn't you hear, Goldman Sachs IS a bank.

Tue, 05/06/2014 - 13:31 | 4732492 cougar_w
cougar_w's picture

Indeed, I had to hock several of my Rembrandts last year to underwrite the purchase of a fleet of Gulfstream jets.

Sometimes you just have to be practical about things.

Tue, 05/06/2014 - 13:40 | 4732534 pods
pods's picture

Times are tough all the way around cougar, just be strong and we will get through this.

These tough times won't last forever.

pods

Tue, 05/06/2014 - 13:31 | 4732495 Yen Cross
Yen Cross's picture

     Blankfein probably has a wall in his bunker that's got some empty space.

Tue, 05/06/2014 - 13:32 | 4732503 Soul Glow
Soul Glow's picture

I heard Blankfein has an original Hitler painting in his bunker too.

Tue, 05/06/2014 - 13:32 | 4732497 gdiamond22
gdiamond22's picture

You think Blankfein would take some of Krauthammer's Nazi art?

Tue, 05/06/2014 - 13:32 | 4732498 Stoploss
Stoploss's picture

Only 250 basis points???????????

 

WHAT A FUCKIN DUMB ASS.

Tue, 05/06/2014 - 13:59 | 4732623 buzzsaw99
buzzsaw99's picture

um, it's a tribal thing

Tue, 05/06/2014 - 13:33 | 4732506 Seasmoke
Seasmoke's picture

They are going to look beautiful in all of those Goldman Sachs bank lobbies across this magnificent country. 

Tue, 05/06/2014 - 13:37 | 4732525 Soul Glow
Soul Glow's picture

I hope not.  I'd hate to burn a Picasso when burning down a bank.

Tue, 05/06/2014 - 13:39 | 4732532 negative rates
negative rates's picture

This what?

Tue, 05/06/2014 - 13:37 | 4732524 NOZZLE
NOZZLE's picture

I've got a faded Van Halen poster (circa 1979), what do suppose Chase or Bacteria of American will allow me to pledge ir for? 

Tue, 05/06/2014 - 13:41 | 4732535 negative rates
negative rates's picture

One tenth of it's actual perceived value.

Tue, 05/06/2014 - 14:34 | 4732788 NOZZLE
NOZZLE's picture

Live at the Aragon Brawl Room, February 18, 1979.

Tue, 05/06/2014 - 13:41 | 4732540 Kaiser Sousa
Kaiser Sousa's picture

who gives a fuck about Steve Cohen.....

Tue, 05/06/2014 - 13:45 | 4732554 buzzsaw99
buzzsaw99's picture

AIG no doubt insures the whole shitty shmear.

Tue, 05/06/2014 - 13:52 | 4732582 Itchy and Scratchy
Itchy and Scratchy's picture

I'll act surprised! (.)(.)

Tue, 05/06/2014 - 13:56 | 4732608 wstrub
wstrub's picture

I expect art prices to crash next.

Tue, 05/06/2014 - 14:02 | 4732638 Hongcha
Hongcha's picture

wstrub; the hottest market of the last ten years was Chinese Contemporary; which topped in 2010.  They all but rang a bell on that one.  Subsequent prices don't fetch half what they did.

But the excellence of ancient art and the noble materials - jade, gold, etc. - all hold their value, give or take.  Funny how that works.

Tue, 05/06/2014 - 14:03 | 4732616 Hongcha
Hongcha's picture

One billion dollars in total appraised value is a tremendous amount of money.  I would like to see an inventory.  I would bet a lot of it is Modern / Contemporary which would mean hyped Warhols of Mao with lipstick and other such crap.  

Real value in art is measured in terms of skill, grace, quality of materials invested and time taken - which most contemporary art completely disowns in favor of juxtaposition. hype, controversy and cult of personality.  Signs of the times in a civilization in decay.  Rant off.

Tue, 05/06/2014 - 14:29 | 4732763 DoChenRollingBearing
DoChenRollingBearing's picture

Quite right.  Classic valuable art is highly valued for a reason.

Tue, 05/06/2014 - 14:00 | 4732626 Seize Mars
Seize Mars's picture

Man it must be great to belong to a club where they give you free money when you get into trouble in business. That would be quite an advantage.

Tue, 05/06/2014 - 14:15 | 4732706 orangegeek
orangegeek's picture

it's a bribe

 

there must be a sex tape GS wants buried

Tue, 05/06/2014 - 17:42 | 4733707 WMM II
WMM II's picture

i'd guess an extortion. cohen probably has some gs paper that if he cashes in, gs loses everything.

and then cohen would lose downstream.

bet they're both tryin to unwind.

my not even 2 cents worth.

:)

Tue, 05/06/2014 - 14:29 | 4732761 TrustbutVerify
TrustbutVerify's picture

I would assume the collateral-to-loan ratio would need to be 7-8x.  Art is in a bubble. Once the art value is cut in half (or more) and a broker has to double his money to market it again...well, let's just say ther wholesale value needs to be "real." 

Tue, 05/06/2014 - 16:31 | 4733400 Matt
Matt's picture

I wonder how hard it is to manipulate art prices. Can one bank put a piece of art on deposit at another bank, and then that bank can lend out 20X the value of the art to the first bank, with which that bank can then buy more art? Any derivatives on art yet? How's that whole Chicago Museum thing going?

EDIT: or Detroit, I sometimes confuse the two.

Tue, 05/06/2014 - 14:39 | 4732822 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Um excuse my ignorance but isn't this finance not a pawn shop?

Tue, 05/06/2014 - 14:44 | 4732846 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

And when you are making profits in the billions you shouldn't need to be taking out loans at 'god's pawn shop now should you?

Tue, 05/06/2014 - 14:45 | 4732856 Arrowshot
Arrowshot's picture

I got a collectable velvet Elvis?

Tue, 05/06/2014 - 14:54 | 4732894 starman
starman's picture

GS to open "Art Bank" branches  in Las Vegas !

No, but its a great idea. What do I win? 

Tue, 05/06/2014 - 15:10 | 4732958 Seize Mars
Seize Mars's picture

Goldman also did this bullshit with photographer Annie Leibovitz. They gave her a bunch of free money when she ran out.
Quite an advantage, this club membership.

Tue, 05/06/2014 - 20:55 | 4734328 flyingcaveman
flyingcaveman's picture

Pretty sure this is how it went down. http://www.27bslash6.com/overdue.html

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