Art: From Now On, Bring Cash

As a huge loan deal comes unraveled, Sotheby's trims its policy

Even people who can contemplate dropping, say, $25 million on a painting occasionally need a little help. And in recent years, as art prices steamed ever higher, Sotheby's, the international auction house, has been happy to oblige. When a particularly coveted painting came on the block, Sotheby's told favored customers that it would loan them up to half of whatever they bid and let the painting itself serve as collateral. With terms like those, skeptics mused, is it any wonder that art prices (and Sotheby's commissions) soared? "The auction houses turned the art market into a financial market," charges Manhattan art...

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