Margin Call: Analyzing the Roots of a Crisis

J.C. Candor's Margin Call has been praised by critics for its portrayal of the moral and economic complexity surrounding the financial crisis of 2008. While Wall Street has been publicly demonized as a morally bankrupt institution, the film successfully analyzes the crisis as more than a mere story of good and evil. 

One constant theme throughout the film is a lack of accountability. In place of morality, decisions were guided by complex financial models and most importantly by a constantly changing set of assumptions. It becomes abundantly clear that no proper controls were in place within or outside of the firm, and that perilous decisions were instead left to the discretion of executives such as John Tuld and Jared Cohen.

Prior to the slowdown in housing prices in 2007 and the ensuing crash in 2008, decisions at investment banks had been made according to largely the same set of unchanging assumptions. These included but were not limited to easy monetary policy, loose credit standards, steadily increasing housing prices, and constantly growing demand for complex fixed income instruments such as MBS and CDOs. Even renowned economists such as Alan Greenspan had declared a new age of American prosperity instead of recognizing that these conditions were likely to change at some point. This allowed executives such as John Tuld, played by Jeremy Irons, to irresponsibly leverage their banks to the point where any notable increase in volatility or change in assumptions would lead to disaster. The market collapse that ensued was the result of executives ignoring the risks that were inherent to the instruments that they were selling, and instead counting on their willing counterparties to be steady buyers.

Mike Ott

Margin Call Paints Ominous Picture of Chaos

Margin Call has something very scary to say.

Through the dark and dreary chaos that unfolds throughout the night at Jeremy Irons' investment bank, an unsettling realization comes rising to the surface. Put simply, the movie makes us blatantly aware that the country's financial system is too complicated for just about any man or woman to navigate while claiming to possess a true understanding of what he or she is doing. What a harrowing thought.

To see that moral and compassionate men, such as Kevin Spacey's character, and greedy, ruthless men like the one Irons plays, can be equally powerless to fend off disaster when the going gets tough is frightening. It literally took a rocket scientist (played by Zachary Quinto) to put all the pieces together and sound the alarm; alas, it was already about two weeks too late. And the man (Stanley Tucci) whose work set him on the course to the big discovery? He was terminated while some of his younger coworkers got to stick around to count their bonuses. What a tragic mess.

More than for any other reason, this movie plays out as a thriller because nobody is ever fully in charge. Irons' John Tuld might sit in the chair at the head of the dreary board room table, but he's just as desperate and unsure of himself as the sheep he's been naively leading to slaughter. Really makes you worry about the country's biggest real life corporations. Have some of our banks gotten so big that they've become impossible to manage?

-Brian Seliber

"It wasn't brains that got me here"

The movie “Margin Call” directed by J.C. Chandor gives a troubling view of the financial world and especially those who run it.  

Each time a new level of management is brought in, they need a simpler explanation of what is happening from Peter Sullivan (Zachary Quinto).

 “Speak to me as you might to a young child, or a golden retriever. It wasn’t brains that got me here, I can assure you of that” says John Fuld (Jeremy Irons) to Sullivan who seems to be the only one who understands what is happening.

I don’t expect top executives to understand all of the complex risk equations, but they should be able to talk to their employees and understand the financial lingo.  It is troubling that the people making decisions for influential banks that affect the entire world’s economy need things to be explained to them as if a child.   

In the end, the final decision comes down to Fuld who openly admits, “I don’t get any of this stuff.”  He therefore makes his decision to sell off all of the toxic assets with nothing but his own interests in mind, despite the disapproval from Sam Rogers (Kevin Spacey).  If you admittedly know very little about something, it is usually a good idea to listen to someone who does.  Fuld chooses to ignore Rogers’ advice and to instead minimize the damage done to the firm at the cost of his employee’s careers and the bank’s relationship with its competitors.

Unfortunately I do believe this to be a realistic account of Wall Street and the financial world.  The ethics practiced in the financial world are not a strong suit by any means.  In order for banks to be successful they must keep the focus on the bottom line and this sometimes leads to acting unethically.  This exemplifies how guys such as Fuld rise to the top and others such Rogers get passed up for promotions (another common theme throughout the movie).  Rogers hesitates and thinks about the repercussions of his actions while Fuld looks to simply save the firm as much as possible at any and all costs.   

-Tyler J. Tokarczyk

Margain Call

Margin Call takes place within twenty-four hours inside a powerful investment bank, just before the financial crisis of 2008. As people who had been working there for 15 years got laid off, young, inexperienced men were given their work. A young analyst is able to fix a formula created by his ex-boss that forecasts the demise of the firm. While the information is passed up the corporate ladder, the corruption within the hierarchy itself becomes evident.

 A 2011 film directed by JC Chandler, Margain Call constantly uses lines such as “just speak to me in plain English” and “it’s just money” to show how ill-equipped the heads of the bank were. It amazed me how the executives in the firm did not fully understand what was happening and jumped to quick conclusions, which saved only themselves.

While many investors would be left without anything, the head of the bank made the decision to protect only the bank, selling everything before the Fed got involved. The lack of care about long time clients proves that the financial system is untrustworthy.

Meade Brewster

Don't Hate the Player, Hate the Game

Washington and Lee's 2012 Republican Mock Convention came to a close this weekend after the school selected Mitt Romney as the republican nominee for the 2012 presidential election. Political pundits James Carville and Ann Coulter kicked off the convention with the first ever Mock Con political debate.

In the debate Coulter criticized President Obama for his inability to transcend above “Washington politics.” Carville responded, "Are we supposed to blame Obama for not doing what no one else has been able to do?" Debate moderator Mike Allen then asserted that outlook “removes all responsibility” from everyone in Washington and assumes they have “no control” over what occurs.

In the 2011 film Margin Call, Jeremy Irons’ character shared a similar sentiment by saying “there will always be winners and losers” in the financial sector. In essence, arguing there was nothing he could do to stop the coming financial crisis.

As an economics major, I agree that there will always be winners and losers in a free market. Economic principles rely on a number of assumptions, many of which we economists know do not accurately reflect the world we live in. As a result, scarce resources (like money) are not always allocated efficiently.

One key economic assumption is that there is perfect information in a free market. As shown in Margin Call, the firm decided to sell all of their troubled assets once they learned about the likely value of those assets. That highly valuable information was not available to all the other financial firms.

As Irons’ character asserted, his company sold those assets at “fair market value” in a “fair market place.” Irons and his company acted in their best interest under the constraints of the market, which is precisely what everyone does in a capitalist society. Many would argue that Irons’ company should not have sold those troublesome assets, but I do not believe Irons acted dishonorably by doing so. If someone would classify Irons as immoral, the same would have to be said about every person who willingly participates in our capitalist society.

I am not sure whether I would classify “Washington politics” as moral or immoral. However, I believe that question can be answered by looking at the constraints of our political system and the behavior that is incentivized under our system. Again, if the behavior is seen as immoral I would argue the system that incentives and awards that behavior should be seen as much more immoral.

- Jarrett W. Smith

Margin Call on Wall Street’s Moral Standards

Margin Call portrays the unethical character of employees of an unnamed Wall Street firm when a decision is made by the firm’s leaders to reduce the firm’s loss exposure to an imminent financial crisis by selling the firm’s toxic assets to its clients. The movie raises the following ethical question: would Wall Street employees compromise their moral standards and reputation for a huge pile of cash? 

The low-level traders are thrown into the moral dilemma mix at 6:30 AM when they are told by their boss Sam Rogers (Kevin Spacey) that the “party’s over as of this morning.” In order to induce the traders to destroy their reputations and careers by helping the company sell out its clients, the traders are offered a one-time $2.7 million payoff. When promised this bribe, the employees pick up their account folders without hesitation and begin to sell. 

CEO John Tuld’s (Jeremy Irons) career mantra for making a living in business is “be first, be smarter or cheat.” When he learns about the looming financial meltdown, he commands his employees to sell the firm’s worthless assets. Even though, Tuld knows that his orders will cause huge losses for the clients who buy these assets, at the end of the day, Tuld calmly has dinner in the firm dining room, showing no remorse for the lives he is ruining. 

From the occupants of the small cubicles to executives in the corner offices, questionable and even objectionable actions have been made in order to transfer the anticipated financial losses from the firm to its clients. Within the financial world, moral boundaries are nonexistent. At the request of the firm, individuals willingly discard their personal values in exchange for the firm’s payment of millions of dollars.

- Harlyn Croland

Margin Call

Margin Call is a film by J.C. Chandor that shows a 24-hour period at an investment firm that has realized that the financial market is about to collapse. We see the views from a trader and higher up executives in the firm as everyone tries to decide what their best plan of action is.

            As journalism student and not an econ student, I found the movie Margin Call to break down the financial crisis into a very interesting story. I was very surprised at how the investment firm made the decision to try and dump their toxic assets off before the general public knew they were useless.           

            One thing in that the firm continued to do after they realized their mistakes was keep-throwing money at people to try and fix it. The fact that the executives were willing to throw $1.3 million at any trader who was able to move 93 percent of their assets for the day was amazing. That seems to be the only way to convince people to destroy the business they have put their life into.

            Kevin Spacey’s character seemed to be the only high up employee who was disgusted with the actions taken by John Tuld. We saw him have a large moral dilemma with what they were forcing their employees to do. You could tell that J.C. Chandor had somewhat of a bias towards executive at firms such as this because he portrayed them as selfish idiots. I have a feeling they don’t need something to be broken down to them as if being told to a “golden retriever”.

Billy Crosby