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 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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DoChenRollingBearing's picture

Picassoz and Chagallz, fishez!

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.)

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.

Jlasoon's picture

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

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.

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.


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.

Soul Glow's picture

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

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.

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.

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.

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.

fonzannoon's picture

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

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.

Winston Churchill's picture

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

Yen Cross's picture

   Danish or Norweigan Winston?  

Seize Mars's picture

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

Skin666's picture

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

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.

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.

Matt's picture

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

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.

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.


Yen Cross's picture

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

Soul Glow's picture

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

gdiamond22's picture

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

Stoploss's picture

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



buzzsaw99's picture

um, it's a tribal thing

Seasmoke's picture

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

Soul Glow's picture

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

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? 

Kaiser Sousa's picture

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

buzzsaw99's picture

AIG no doubt insures the whole shitty shmear.

Itchy and Scratchy's picture

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

wstrub's picture

I expect art prices to crash next.

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.

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.

DoChenRollingBearing's picture

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

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.

orangegeek's picture

it's a bribe


there must be a sex tape GS wants buried

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.


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." 

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.

Dewey Cheatum Howe's picture

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

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?