TELEGRAPH.CO.UK - Credit crisis forces rich Americans to pawn their designer belongings
Cash-strapped Americans in even the country’s ritziest enclaves are heading to pawn shops for credit amid the economic crisis and lending squeeze.
By Catherine Elsworth in Los Angeles
Last Updated: 11:32AM GMT 16 Dec 2008
In Beverly Hills, one of the nation’s glitziest post codes, so-called “collateral lenders” report an influx of well-to-do customers pawning everything from fine art to designer watches and diamond-encrusted jewellery worth hundreds of thousands of dollars.
A block from Rodeo Drive’s luxury shops and its extravagant Christmas displays – Baccarat Crystal chandeliers adorn the street – Jordan Tabach-Bank, self-described “pawnbroker to the stars”, is seeing “plenty of rich people” lining up for credit.
His discreet shop, Beverly Loan Company, is giving out loans at a rate never seen in its 70 years in business. The sums range from 50 dollars to seven figures, handed to professionals battling hard times, including many in the entertainment industry. They need the money for everything from plastic surgery to keeping their businesses afloat and meeting mortgage payments on their mansions.
”We’ve always had steady business but never before have we seen so many white collar borrowers, lawyers and doctors and accountants. And, being in Beverly Hills, we do see our fair share of directors, producers, writer and actors,” Mr Tabach-Bank said.
”This downturn in the economy is affecting people from all walks of life.”
Some 98 percent of the merchandise pawned is jewellery or watches. “I’m seeing a lot of Rolexes, a lot of diamonds, a lot of (Swiss watch maker) Patek Philippes, a lot of very high end goods,” Mr Tabach-Bank said. “Large diamonds always fetch the most money.”
Although the shop also takes fine art – it has recently accepted work by Picasso, Andy Warhol and Roy Lichtenstein – people preferred to pawn jewellery for the “instant gratification,” he said. “Art requires a longer authentication process than jewellery – they make diamond testers, they don’t make Warhol testers.”
Over in New York, Daniel Pasternak, manager of Renaissance Watch Company, a pawn broker dealing in “higher end watches and jewellery” near the Rockefeller Centre in Midtown Manhattan, has also seen a surge in white collar custom.
He said business was 20 per cent up and he was seeing a lot customers who had never pawned anything before.
”We’ve had people you wouldn’t have expected before, from Wall Street or from the financial services sector. They need to raise money for whatever it is but they don’t want to sell their merchandise, they want to get it back at a later date. So they put it in for a loan.”
Mr Tabach-Bank said increasingly he noticed customers were seeking loans to keep their businesses going.
”It used to be individuals needing money. But I’ve seen more and more people needing money to meet payroll or to put gas in their fleets of trucks or cover health insurance.
”The credit facilities of banks have not only tightened but frozen.”
Unlike a bank, he aims to accommodate his customers – within reason, he said. “We don’t necessarily foreclose on them the day they become due.”
Some pawnbrokers worry the recession will in the long run be bad for such lenders because of falling sales and customers failing to get the money to buy back their merchandise.
”Pawnbrokers, at least here in New York, do better when the times are good, not when times are bad, because when times are bad people can’t take their stuff out and that’s not what we want,” said Gary Gross, vice president of the Pawnbrokers Association of New York.
Mr Tabach-Bank, however, said so far his redemption rate, although it has slipped a couple of points, remains around 95 per cent, “which is still pretty darned good. Any bank in America would be pretty happy to have a 95 per cent redemption rate.”
This entry was posted on Tuesday, December 16th, 2008 at 5:36 pm
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