Saturday, November 8, 2008

Bloomberg: Even Pawn Shops in Bevery Hills are Booming

Goodness gracious! I guess every income strata is indeed being hit. It is ironic he used the words I've used in the past in regards to pawn shops - the lender of ONLY resort for more and more Americans. I just didn't expect it to be the Beverly Hills crowd when I said "people". I guess the lack of discipline, planning, and financial literacy is not just a problem of the "common folk".
  • The worse the economy gets, the better it is for Jordan Tabach-Bank. ``Business is booming,'' said Tabach-Bank, the chief executive officer of Beverly Loan Co. in Beverly Hills, California.
  • Beverly Loan is a pawnshop. Not just any pawnshop, but the kind that caters to people who hock Cartiers, Harley- Davidsons and Oscar statuettes when they need cash. They really need it now, Tabach-Bank said from a third-floor office, protected by bulletproof glass, off his showroom in the Bank of America building near Rodeo Drive.
  • ``I've never seen so many bankers, lawyers, doctors and actors'' with valuable things to pawn, he said. He pointed to an 18-carat white gold bracelet with 69 diamonds ($2,900) and an 18-carat yellow gold Rolex Yachtmaster II (``a steal'' at $18,500).
  • With credit drying up at regular lenders, ``in many cases now, we're not just the bank of last resort,'' Tabach-Bank said. ``We're the bank of only resort.''
  • The average U.S. pawn transaction is $75, according to the association's Web site. At Tabach-Bank's shop, ``confidential collateral loans,'' as they're called, have been made on art works by Pablo Picasso, Andy Warhol and Jean-Michel Basquiat. Amounts loaned range from several thousand dollars to ``six- and seven-figure deals,'' he said, with clients using the money to cover the mortgage, make alimony payments or finance cosmetic surgery.
  • South Beverly Jewelry and Loan, also in Beverly Hills, has seen business triple in the past six months, said owner Yossi Dina. Some of the collateral is in a parking lot: About 60 cars, including Ferraris, Porsches and a Bentley. ``We're making loans today we never used to,'' Dina, 54, said. ``Millions -- never used to have that. We're selling a necklace now, the client wants $2.7 million.''
  • The pawning surge has a drawback, according to shop owners. Just as falling real estate prices have led to record foreclosures in some cities, customer defaults have climbed by ``a couple of points over the last six months'' said Tabach- Bank.
  • In downtown Los Angeles, King's Jewelry & Loan began seeing luxury business pick up about 18 months ago when variable-rate mortgages started resetting to higher payments, said owner Sam Shocket, 54, a member of the national association's board. ``We were seeing more Rolexes, Patek-Philippe watches, larger diamonds,'' said Shocket, who deals almost exclusively with jewelry.
  • ``Instead of construction workers, we'd see major contractors,'' Shocket said of his customers. ``Instead of real estate agents, we'd see brokers. Instead of actors who played bit parts, we'd see someone you might recognize from `The Tonight Show.' ''
  • Tabach-Bank said clients have pawned items to pay for mortgages, emergency health-care, ``tummy tucks and face lifts'' and gambling debts, ``especially around Super Bowl season.'' (I'm noticing a plastic surgery theme here - "hey man, I'm technically broke but I look good doing it!")

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