Why do banks buy so much art? To earn prestige apparently. Yet that prestige may come at a cost as banks do not want to be seen spending extravagantly in the wake of the mortgage crisis and bailouts.
Few banks collect art to make money. A liquidation auction of art from collapsed investment bank Lehman Brothers in London on Sept. 29, for example, raised $2.6 million. Not bad, but it won’t make a dent in the $613 billion in liabilities the bank had run up when it folded.
Art confers respectability and respect, according to Joan Jeffri, director of the arts-administration program at Columbia University’s Teachers College, and banks need those more than ever. From the mighty Medici banking dynasty in Renaissance Florence to the giants of the 19th century, like John Pierpont Morgan, art has been used to project status and power.
You could argue that the banks have done a better job of acquiring art than they have of acquiring financial assets. What’s more valuable: a Richard Diebenkorn painting or a toxic collateralized debt obligation? “The people responsible for managing these corporate collections have professionalized,” Jeffri says. “Whereas it was once the wife of the CEO or some personal friend managing the CEO’s interest in art, now banks have art departments and on-staff curators.”
- Eben Harrell & Frances Perraudin, Cultural Assets: Banks Stock Up on Art, TIME, http://www.time.com/time/magazine/article/0,9171,2024218,00.html?artId=2024218?contType=article?chn=bizTech (last visited Oct 25, 2010).