Sometime you have to look at the gift horse and wonder why and where did you come from? For the art and antiques trade, the recently passed American financial reform legislation has many intriguing possibilities. By creating the Consumer Financial Protection Bureau, the legislation would allow this government sanctioned agency to oversee some of the dubious operations of auctioneers like Sotheby’s and Christie’s. No class action law suit needed, nor any call to create Federal or State legislation specifically focused on auctions.
The August issue of the Maine Antiques Digest had an interesting article written by Daniel Grant that explained the details and possibilities of the Bureau as well as opinions for and against its jurisdiction in the industry. Of course the Sotheby’s/Christie’s duopoly, individually would not comment on the new law, but Christie’s apparently noted that “we are following the process…” They better be.
What is most clear about how this industry is dysfunctional one only has to look at the “dealers” or the secondary market participants, who are totally disorganized with little or no hope of an appealing vision. If you were on the Bureau, who do you think will muster the necessary lobbyist and influence peddling? The Duopoly knows this game and welcomes the fight as long as they can lose battles but win the war. With no counterbalance in industry influence to the auctioneer’s organization and hardened operating process, it is the consumer who is ultimately getting fleeced. Dealers too, should not be immune from jurisdiction.
It would be in the dealer’s best interest to side with the consumer; the way the auctioneers presently operate, they need to control both the consumer consigner and consumer buyer. Technically, they are legally bound to the seller, but when you get most of your money from the buyer, I have to question where their allegiance is? In reality it is where the auctioneer can cut the best deal for their own profit. The potential for conflicts are enormous and sometimes blatant.
The process for any consideration of this industry before this Bureau will take years. It is just now being organized and the priorities of the consumer range from credit card rates and fees to banking, mortgages, etc. This industry is not a financial powerhouse of credit default swaps or collateralized bond, but is does reach into every home that has a work of art with value. It could be a collectible Pez dispenser or a painting by Van Gogh. The ability to buy and sell should be unencumbered from deception, fraud, and conflicts of interest.
If The Consumer Financial Protection Bureau does ever consider reviewing how the controlling companies of this industry operate, there will be changes. The extent to which those changes rehabilitate the auction process would be a welcomed adjustment. Perhaps the biggest opportunity would be for the consumer to have a new faith and respect for our industry.