Met mortgages Chagalls: Desperate times

The Metropolitan Opera has watched the value of its endowment plunge by about a third and is facing a $40 million deficit for next season. Add in what will likely be shrinking donations and you have a pretty desperate situation. So desperate in fact, that the board has elected to take out a loan against the giant Marc Chagalls that currently hang in its lobby.

The Triumph of Music and The Sources of Music was reportedly appraised at $20 million and a Met spokesman tells New York that "the Met has had a long-term loan for a number of years which relied on cash holdings as collateral. The Chagalls are now being used as partial replacement collateral in order to free up some of the use of the cash."

This sounds pretty desperate, but there's really nothing wrong with using the art as collateral for a loan, especially if it's considered secure enough to warrant a lower interest rate than other options would require. Still, one board member reportedly called the decision to use the Chagalls to secure a loan a "decision of last resort."

Celebrity photographer Annie Leibovitz has also taken out a loan against all of her work -- including future work -- and high-end pawn shops will likely be doing a brisk business, especially as Manhattan's booming real estate market deflates and over-leveraged elites look for other sources of collateral.