Title: Margin Call
Director: J.C. Chandor
Writer: J.C. Chandor
Starring: Kevin Spacey, Jeremy Irons, Zachary Quinto, Paul Bettany, Penn Badgley, Simon Baker, Stanley Tucci, Demi Moore, Mary McDonnell
A movie scene that came up in my YouTube feed was a pivotal meeting from 2011’s Margin Call, embedded here in all it’s spoilerific goodness:
It’s a tremendous scene, and we’ll cover it in a bit. I saw it and was hooked. I’ve watched it several times since, and we finally watched the movie for our regular Saturday night movie selection.
Margin Call is set at a commercial investment bank at the very beginning of the 2008 Subprime Meltdown. Market turbulence has spurred a massive layoff, the kind where security guards stand there as you pack your stuff and march you to the elevator. (I’ve been though a few, though never at a bank.) Before leaving, Stanley Tucci’s character passes a thumbdrive to Zachary Quinto’s character. While his remaining co-workers are out getting sloshed to celebrate not getting laid off, Quinto digs into the data, provides missing variables Tucci’s couldn’t, and realizes that the bank is faced with a looming catastrophe.
He calls back in a co-worker (Penn Badgley) and his new boss (Paul Bettany), who was formerly his boss’s boss, and reveals that mortgage backed securities (MBS) products are now trading outside the historic parameters that govern their risk assessment software. “Once this thing gets going in the wrong direction, this thing is fucking huge.” “How huge?” “The losses are greater than the current value of the company.”
Bettany then calls in his boss (Kevin Spacey), who sees the scale of the problem and calls in two high level executives (Simon Baker and Demi Moore), who then call in the company’s CEO (Jeremy Irons), which sets up the meeting in the video clip.
This is a pretty extraordinary chain of events, in which a junior analyst’s work travels up the chain of command until he’s in a meeting with the CEO in the middle of the night less than eight hours after he discovered the problem. The math doesn’t lie, and the math has detected an existential threat to the company that has to be addressed as soon as possible. There’s no thermocline of truth, and attempts at ass-covering (especially by Moore and Baker’s characters) aren’t allowed to derail necessary actions.
Getting back to that meeting, it’s a masterclass not only in acting, but in writing a scene that conveys exposition without boring viewers. Iron’s CEO (named John Tuld, an echo of Lehman Brother’s chair Richard S. Fuld Jr.) is meant to be seen as a ruthless son of a bitch (and he is), but here he conducts the meeting like a maestro: Putting Quinto’s very junior character at ease, understanding and accepting his explanation and its implications for the company, gently asserting rank (“you’re talking to me”), and then making the very difficult decision to completely liquidate the holdings that had been the bank’s most profitable business (“Sell it all. Today.”) in order to secure the firm’s survival, the decision Lehman Brother’s CEO didn’t make.
Spacey is also excellent, questioning the decision because it will essentially end his trading floor. But Iron’s character is, in fact, right all the way down the line. The firm’s survival is his overriding objective. The securities they’re selling are not worthless, simply distressed and likely to become more so. They’re an existential threat to Iron’s bank because they’re over-leveraged and have too many of them on their books; another company might not have the same problems. The history of the Subprime Meltdown validates Iron’s choice, but there was no way to know with certainty it was the right call at the time. Other companies might be running other software models making other assumptions. Some market panics or crashes (such as 1987’s Black Monday) prove short-lived. Everyone buying those MBS-backed securities in the fire sale was betting that they would recover and make profitable investments.
If predicting the market was easy, everyone would do it.
This is a first rate film I was only barely aware of when it came out, and is an astonishing one for a film with a reported budget of $3.5 million made in 17 days. It would be virtually impossible to assemble a cast that good for so little money these days. Plus the production company had to scramble because Irons’ visa expired over the fourth of July weekend.
Margin Call is well worth watching on streaming, or even picking up on Blu Ray.