Margin Call

"There are three ways to make a living in this business: be first, be smarter or cheat."

Margin Call is the story of one night at a the trading floor of a fictional investment bank (it reflects Lehman Brothers primarily) where a young analyst (Zachary Quinto) discovers a serious problem; the volatility of the mortgage-backed securities on the firm’s books is too high and a massive swing downwards would create a loss larger than the market cap of the entire company. He tells his superiors, there a bunch of meetings, the CEO is brought in on a helicopter, they are forced to sell their position of worthless securities into the market and a bunch of people get fired. The movie attempts to simulate the decision making process that some of the big banks in the US went through that led to their eventual downfall. The problem with the movie is that it is a myopic view of a very complex event.

Margin Call plays right into the Occupy nonsense ideal that has been pervading popular culture; essentially, that the entire financial crisis was caused by greedy banks and it’s all their fault. The movie never once addresses any of the reasons behind why the mortgage-backed securities becoming worthless (greedy Americans entering into homes they couldn’t afford and agreements they didn’t understand, then declaring bankruptcy and leaving the banks to foot the bill). It only focuses on the banks’ securitization of the mortgages and getting stuck with them once they were worth nothing. I am not defending their decision to ditch their positions knowingly full well they were worthless, which was objectively unethical, but it is a very small part of the whole series of events. I recognize that this movie is meant to only be about one specific event, but the fact that the movie is about an unnamed bank is clearly meant for the audience to assume it is a proxy for all banks and they all did something similar to this. The entire film reeks of anti-capitalist bias and I found it extremely off-putting.

The specific story in the film of how the bank discovers the problem and deals with it is, for the most part, fairly realistic. There is some absurdity to be found, such as the analyst who discovers the issue being a literal rocket scientist, because of course, no one (including the audience) would ever doubt the financial analysis done by a rocket scientist. This movie assumes the audience has the brain of a monkey and cannot do any critical thinking for itself. The big question is: of all the things that Wall Street banks did during the financial crisis, why was this chosen to be the focus of the story? Why not Goldman Sachs’ selling of mortgage-backed securities and then betting against them with the firm’s own money? There are many more interesting stories to do with unethical bank dealings that this movie could have been about; I don’t know why the screenwriters chose this.

Actually, yes I do. The real, underlying problem with Margin Call is that it was written by people who have no idea what they are talking about when it comes to finance. Even the title of the film is inaccurate. A margin call is imposed on a borrower by an outside lender who forces the borrower to raise cash by selling securities. In contrast, the fictional investment bank in this film decides to ditch its position in the mortgage-backed securities because the value of the securities fell outside the bank’s value-at-risk (VAR) computer-model parameters. Nobody outside of the firm was demanding cash and the firm was not suffering from a liquidity crisis like real-life Lehman Brothers experienced before it went under. This movie was written by people who just want to blame banks for everything and have probably read the Wikipedia articles on the financial crisis and have proclaimed themselves experts. This movie’s overall tone is propagandist nonsense and is insultingly one-sided against the financial industry.

A story about people meeting to discuss increased volatility of mortgage-backed securities is not exceptionally interesting, so the movie fills the gap with a star-studded cast. The performances are admittedly very good, particularly the late show-stealing appearance by Jeremy Irons as CEO John Tuld; a thinly-veiled reference to Lehman CEO Richard Fuld. Stanley Tucci is also fantastic as one of the senior risk managers, though he is in about three scenes total. However, the characters could not be more clichéd if you were reading a textbook about clichéd characters. Each character has precisely one dimension, and they are as follows:

• The smooth-talking CEO who only cares about himself.
• The young analyst who only cares about money, who idolizes up to...
• The young manager who makes more money than he knows what to do with.
• The young analyst who discovers a problem everyone else missed because he is a rocket scientist genius.
• The middle manager who wants to do the right thing but struggles with it because he has sacrificed his entire life for the company.
• The boss of the middle manager who is too young for his job and also only cares about himself.

There are some other characters floating around but they are basically variations of the above. The best character is actually Paul Bettany’s, the self-obsessed young manager from above, who says most of the intelligent things in the movie. He has a particularly good monologue towards the end of the film that I enjoyed. It’s sad because scenes like this show the potential that this movie had and squandered.

The movie’s bias against finance professionals kicks into high gear during the last ten minutes of the film where you see one character talk about how he was once an engineer and found that much more fulfilling, and another character who is divorced from his wife because he cared more about his career. Even the rocket scientist professional questions at one point the ethicality of paying any one person as much as some of his coworkers are. Give me a break. Are there any normal, ethical people working for the company, are happily married and do their jobs so they can provide for their family? Of course not, because that wouldn’t jive with the whole “everyone in finance is greedy” vibe of the entire film.

Bottom line, beyond the good performances of the actors, there’s not much good here and I don’t recommend this movie. It’s one-sided, clichéd, uninteresting and boring. Save your time and watch the fantastic Inside Job by Charles Ferguson instead.