We haven’t followed too closely the controversy around Annie Liebovitz’s personal finances, or the circumstances that may cause her to go broke and lose the rights to her entire body of literature.
Felix Salmon — who knows both the worlds of finance and art quite well — has been on top of it, and notes a new development involving Goldman Sachs (GS), which apparently owns a piece of the loan provided to Liebovitz by Art Capital.
While Art Capital is eager to tighten the screws on Liebovitz, Goldman Sachs (whose reputation is in need of repair) has no interest in being portrayed as the company that seized Liebovitz’s entire collection. So they’re dragging their heels.
But here’s the part of Salmon’s writeup that’s really baffling:
Allow me to make the subtext explicit. Art Capital talked Annie Leibovitz into signing a draconian agreement — one which she was all but certain to be forced to default on. The terms were onerous enough to begin with, since they gave Art Capital sole right to sell any of Leibovitz’s work while any of the loan was still outstanding and for two years thereafter. But the terms become really predatory if and when Leibovitz defaults, to the point at which Art Capital expects to make an annualized return on its investment in the 40% to 50% range.
Art Capital did not, however, simply have $24 million lying around when it extended the loan to Leibovitz. As a result, it sold part of the loan to other investors, including Goldman Sachs. And Goldman Sachs, while it’s happy to make lots of money, does not want to be painted as a predatory lender. So Goldman is now Leibovitz’s best hope: if Goldman can buy out Art Capital, it might be able to come to a more Annie-friendly agreement.
Sorry, but this Annie Liebowitz-as-victim-of-predatory-lending line just doesn’t pass the smell test.
The idea of predatory lending kind of makes some sense when you’re talking about mortgage brokers foisting $350K mortgages on minimum wage earners, though even then, the brokers were profiting by exploiting the stupidity of banks. (We’re not asking anyone to feel sorry for banks here, mind you. We’re just saying).
But Annie Liebovitz is an educated, professional woman. When Felix Salmon says “Art Capital talked Annie Leibovitz into signing a draconian agreement,” are we really to believe that Liebovitz was unable to hire her own financial advisors to look over the after? After all, we’re talking about $24 million here. Why did she just agree to it willy-nilly without any advice? This is a gigantic financial decisions here. You can’t just talk someone into a loan at this level, or you shouldn’t have been able to. And Liebovitz, when faced with a huge financial choice, and the self-knowledge that she’s just a photographer, should have known not to make such a big decision alone.
Examples like this really do turn the idea of predatory lending on its head.
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