Steinhardt and his wife, Judy, pledged 20 paintings and drawings, including five by Pablo Picasso and one by Jackson Pollock, as collateral for a loan from JPMorgan Chase Bank NA, according to New York state records. David Steinhardt, Michael’s son, said in an interview that the loan from JPMorgan’sprivate bank is related to an investment in the former American StockExchange building, which Steinhardt bought earlier this year.

“We had the opportunity to get some very cheap borrowing,” said David, who says he goes by the official title of “helper” at his father’s firm, NewYork-based Steinhardt Management Co.

Steinhardt, 70, joins hedge-fund managers including Steven A. Cohen andNelson Peltz who have been using fine art to secure loans. With top works fetching record prices at auctions and borrowing costs near all-time lows, more and more ultra rich are turning to private banks to borrow against their collections, according to Suzanne Gyorgy, director for the art advisory and finance group at Citi Private Bank, a unit of Citigroup Inc.

“We have seen interest in this by banks who have never done it before,” said Howard Spiegler, the co-chairman of the art law group at New York-based Herrick, Feinstein LLP. “Otherwise they are going to lose relationships because a lot of high-net-worth individuals want this kind of loan.” […]