Movie Review: Margin Call

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This morning I began studying for the CFA designation (Chartered Financial Analyst) and ironically it started with the topic of ethics. I say ironic because after the studying I watched the movie Margin Call, a movie that represents people who would have utterly failed any and all ethics courses.

Margin Call takes place at a high profile investment bank at the precipice of the financial crisis of 2008. After a mass layoff, a rocket scientist who works for the firm discovers that the firm has loaded up on mortgages that are about to implode. The rest of the movie is about how the executives decide to deal with the problem (let’s just say ethics becomes a four letter word).

While a movie loosely based on actual events (CEO was named Tuld – ryhmes with…Lehman’s Dick Fuld) the writer(s) did a great job of avoiding a lot of jargon. Sure, there was a couple VaR’s and Standard Deviations tossed around – but other than that it was more about the ethical decisions and the consequences.

I enjoyed the movie and expect it to grow in popularity – after all it has a star studded cast, is set in New York and has a good plot. It may not be the most exciting movie, but in light of the Occupy Wall Street movement it is hugely relevant to the times.

I can recommend Margin Call, especially if your last name is Corzine.

Scott Dauenhauer CFP, MSFP, AIF

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5 thoughts on “Movie Review: Margin Call”

  1. We saw it too. Great movie. There were great scenes that perfectly described the characters’ ethics that are involved in these firms. Kevin Spacey crying over his dying dog as dozens of people were fired!
    I was especially moved by the dialog between the first fellow that was fired at the beginning of the movie and the fellow who was trying to get him to come back to the firm. He was describing how many people and the hours saved, multiplying the numbers in his head, were affected by a bridge he built as an engineer decades ago. This was ONE bridge but the massive positive effect on not just hundreds of thousands of people and the commute hours the bridge saved but on society, not to mention the green house gases saved. Yet, he remembered vividly what he did good for once in his life and not the 19 years he worked at Wall Street!
    The “rocket scientist” who turned quant is the perfect example of our brightest human beings on the planet going to Wall Street because of the money. The incentive, political, and our modern economic systems are focused on the “I” rather than the “we.” American culture is especially prone to the “I” at the expense of everybody else, not matter what the cost.

  2. As an ex-risk manager, I found this movie was spookily realistic. They nailed the whole atmosphere exactly. I loved the movie.

    But I don’t agree that what the bank was portrayed to have done was unethical.

    If I run an investment bank and own a lot of bonds trading at 95% that I think are going to soon be worth 65%, is there some ethical obligation to tell your trading counterparty that you think the bonds are going down? The market is based on arms-length principal transactions, unless the are acting in an agency capacity, which 99% of the time they are not. Each side forms their own opinion of the market and the securities they trade. In the MBS market, your trading counterparties and buy-side customers are all professionals. You can’t lie, or mislead. But liquidating your position, if that is what you need to do to save your firm? Not only is it not unethical, they DO have fiduciary obligations to their stock holders, and their own creditors.

    1. JC,

      I disagree – they were selling to their clients. They were lying to their clients about why they were selling and doing it solely to get a bonus (knowing they were going to be fired afterward). When you knowingly sell junk to your clients in order to benefit yourself, you’ve compromised many ethical guidelines. They knew they would lose their clients for life – a sure sign they knew what they were doing was wrong.

      Scott

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