Margin Call Is The Most Insightful Wall Street Movie Ever Made

This article originally appeared on the Business Insider website and was written by Jake Bernstein.

Spoiler alert: This article discusses key scenes from the film.

J.C. Chandor has embraced Rahm Emanuel’s dictum “never let a serious crisis  go to waste.” The 37-year-old writer and director used the financial crisis as a  springboard to create the most insightful Wall Street movie ever filmed. Margin  Call captures a day in the life of a Lehman Brothers-like bank as it scrambles  to avoid falling into the first cracks of the financial crisis. Briskly paced  and marvelously acted, the movie reveals how large financial institutions  operate and the motivations of the people who work within them.

Margin Call should not be confused with journalism. It is not a precise  overlay of the financial crisis. You’ll never hear the words collateralized debt  obligations uttered in the movie. As the  reporting I did with my colleague Jesse Eisinger showed, the Wall Street  behavior that helped create the financial crisis was often much worse than  what’s depicted in the movie. Chandor isn’t looking for villains or lengthy  explanations. He’s mining deeper truths than the intricacies of credit default  swaps. The societal costs of high finance, the power of self-rationalization,  and the easy embrace of personal corruption is his terrain.

As reporters covering the beat know, Wall Street is a reluctant participant  in introspection. Journalists investigating the Street have to pierce a code of  omertà, borne of the fear of lawsuits and federal investigations. No one wants  to have the reputation of being a snitch in an industry where hiring and bonuses  are based on relationships as much as quarterly results. The truth is even more  tightly held when it hides the origins of financial disaster, but even in the  best of times, these are not, by nature, navel gazers. Traders and market makers  are like sharks, always wanting to move forward, onto the next deal. There is no  percentage in looking back.

All you need to know about the moral universe Margin Call inhabits is on  display in the opening scene of the movie. The downturn has begun. The firing  squad — represented by two women in identical business suits — arrives on the  trading floor trailed by underlings carrying cardboard boxes to cart away  personal effects. When they come into view, a series of swift reactions plays  across the face of Will Emerson, a senior trader acted brilliantly by Paul  Bettany. First fear. Then dismay. And finally, relief and dismissal. After 80  percent of the floor is axed, Emerson’s boss, Sam, a wan Kevin Spacey, gives a  pep talk to the traders left standing. “They were good. You are better. Now they  are gone. They are not to be thought of again.”

Among the casualties is the risk manager for the trading group, Eric Dale,  played by Stanley Tucci. On the way out the door, Dale tells his young protegé,  Peter Sullivan, that he has been working on something important. As the elevator  closes, he hands Sullivan a zip drive and says cryptically, “Be careful.”

Sullivan, played by Zachary Quinto, who also helped produce the movie, waits  until the office clears for the night and then dives into the figures. To his  horror, he discovers the bank is massively overleveraged. If trends continue,  projected losses are much greater than the value of the firm. Upon learning how  dire the situation has become, the CEO John Tuld, portrayed by a scene-chewing  Jeremy Irons, says, “So what you are telling me is that the music is about to  stop and we are going to be left holding the biggest bag of odorous excrement  ever assembled in the history of capitalism.”

Sullivan is the questioning heart of Margin Call. He has a doctorate in  engineering with a speciality in propulsion — literally a rocket scientist. And  like so many of the best and brightest of his generation, he turned to Wall  Street, where Chandor clearly believes his gain is society’s loss. When one of  his superiors asks Sullivan why he has forsaken engineering, he responds: “It’s  all just numbers really, just changing what you are adding up, and to speak  freely, the money here is considerably more attractive.”

Sullivan operates in the constricted space of the Wall Street risk manager.  Risk managers and accountants are among the few who actually know what the  numbers mean. They see the whole picture. It’s a running joke through the movie  that Sullivan’s bosses, right up to the CEO, don’t understand the financial  wizardry behind the products they make and sell. When confronted with Sullivan’s  analysis, Sam says, “Oh Jesus, you know I can’t read these things. Just speak to  me in English.”

The risk manager is not in sales, which is the heart and soul of the  institution. He or she only offers recommendations. Throughout Margin Call there  are a number of references to warnings unheeded. And indeed, in the real world,  the success of investment banks at subverting their risk management rules  correlated nicely with how badly they fared when the crisis hit. In the ultimate  irony, when it’s time for someone to take the fall for the firm’s risk taking,  it’s the head of risk management, played by Demi Moore who is pushed to the  scaffold.

Sullivan and his side-kick Seth, played by Penn Badgley, are still new enough  to the system to be doubtful of its utility. Seth is enamored with the money  Wall Street offers and particularly impressed by his boss Will Emerson, who  pulled down $2.5 million the previous year. They briefly wonder whether that’s  “right,” but push the unwelcome thought away unanswered.

When Emerson tells the eager young men that “you learn to spend what is in  your pocket” and that most of his money is gone, they are incredulous. He  itemizes his expenses for them, including $76,520 for hookers, booze and  dancers. Their adulation only increases when he admits he claimed most of that  back as entertainment expenses.

Later when Seth bemoans the fact that normal people will be hurt by their  actions, Emerson’s ferocious response is shocking both for its amorality and its  kernels of truth.

“If you really want to do this with your life you have to believe that you’re  necessary. And you are. People want to live like this in their cars and their  big fucking houses that they can’t even pay for? Then you’re necessary. The only  reason they all get to continue living like kings is because we’ve got our  fingers on the scales in their favor. I take my hand off and the whole world  gets really fucking fair really fucking quickly and nobody actually wants that.  They say they do but they don’t. They want what we have to give them, but they  also want to play innocent and pretend they have no idea where it came from.  That’s more hypocrisy than I’m willing to swallow. Fuck them. Fuck normal  people.”

Faced with the pile of excrement on the books, the archly named Tuld (Lehman  Brothers CEO was Dick  Fuld) decides the bank must unload it, and quickly, before customers wise  up. At this point, the movie could just as easily be called, “Damage Control:  When Greed Turns to Fear.”

Sam tries to talk Tuld out of his plan. “If you do this, you will kill the  market for years. It’s over. And you are selling something that you know has no  value,” he says.

Tuld responds with the excuse every Wall Street executive used when  investigators came calling after the shit hit the investors: “We are selling to  willing buyers at the current fair market price so that we may survive.”

In the real world, the buyers were not as sophisticated and the deals not as  transparent as bankers claimed.

The House always wins, Emerson tells his young charges. The corollary is that  everybody is for sale. Indeed,  anyone who has qualms in the movie finds the right price for their acquiescence.  In this world, traders earn bonuses for screwing their customers. Tucci’s  character is told he can lose his health care and stock options — or keep them  while sitting quietly in a room for a day at $176,476 an hour. “It didn’t seem  like much of a choice,” he says.

Beyond the sheer entertainment value of the movie, Chandor’s biggest coup is  his willingness to indict a system rather than simply blame the individuals  within it. Ultimately, Margin Call is the story of a Wall Street that has  evolved from an economic helpmate to an economic predator.

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