The auction houses aren’t the only ones with an edge in art lending. Because of their extensive art holdings and private dealing, the Nahmad family can price the works of many top artists as well as, or better than, an auction house. Chinn believes his team can value a work within 10 percent of its eventual selling price. Basquiat works on paper, for instance, are hot right now; the Nahmads have sold a lot of them, and Joe Nahmad, who is taking the lead for the family on the lending business, knows the prices and potential buyers better than almost anyone else. Because of that pricing advantage, International Art Finance is willing to tolerate more exposure than the traditional players. Whereas underwriters at an auction house can lend at a loan-to-value ratio of only 50 percent, Chinn and the Nahmads can use their superior market intelligence, higher risk tolerance, and greater ability to sell the asset (if absolutely necessary) to lend more against it. Further, because fewer decision-makers are involved, and because they’re all principals, not employees, they can be more agile and act faster. Chinn says they did one deal, from initial query to wiring the money, in about 10 days. In this sense, they’re behaving like a merchant bank. The Nahmad family clearly has enough money to fund the $350 million currently on IAF’s loan book. And the European bank that kicked in $125 million is surely providing cheap capital because their risk is so low. That solves the cheap capital problem, at least for now. The Nahmads’ final, and possibly most important, edge is that they know so many people in the industry. Famous for having a free port full of classic art, the Nahmads not only sell art through their own businesses, but they also often consign their works to other dealers. I know one collector whose favorite pastime at Art Basel in Basel is to walk through booths of various secondary dealers, and try to identify which works are consigned from the Nahmads’ holdings. Here’s where Chinn sees a place to open a space for leverage. It’s no secret that the market has been tough for the past two and a half years. That means there are dealers who are sitting on art, but haven’t made sales, and they’re going to need to tap into those works to get by. No dealer really wants to go to an auction house for a loan, since that would mean revealing their inventory. But there hasn’t been another reasonable source of capital until now. One of the great mysteries of the art market has always been how dealers, large and small, finance their businesses. There are any number of interesting and secret deals going on. And though the art market thrives on excess liquidity sloshing around, the dealers who make the market are, according to Chinn, “starved for capital.” I asked Chinn whether he’s worried that an eventual upturn in the market might threaten the future of his business—offering dealers more liquidity, and therefore less need for his loans. He was sanguine, and pointed me back to his earlier observation that financial leverage is essential to the smooth functioning of every other industry. Let’s hope we get a chance to find out if he’s right.