Saturday, November 12, 2011

"Margin Call" and the Financial Crisis

I modestly recommend Margin Call, a new film that dramatizes the 2008 financial crisis.  It features a number of fine actors who give excellent performances, including Kevin Spacey, Jeremy Irons (in the best roles for both in a while), as well as Zachary Quinto (Spock in the Star Trek reboot).  The movie is a bit slow, but is still clearly superior to Oliver Stone’s Wall Street: Money Never Sleeps (2010) in its depiction of the meltdown
The film is about an investment bank that is clearly an allegory for Lehman Brothers.  Early in the movie, Quinto’s character discovers that the mortgage-backed securities that the firm has based their business model around have brought the company to the verge of bankruptcy.  Reflecting the round-the-clock machinations that surrounded the sale of Bear Stearns, the bankruptcy of Lehman, and more recently, the demise of John Corzine’s MF Global, the film then follows the characters over the next 24 hours as they try to save the firm.
Margin Call reflects a number of the issues which surrounded the financial crisis.  A number of commentators have observed that the extraordinary compensation which emerged on Wall Street distorted the American economy by draining talent from other sectors.  Indeed, Quinto’s character turns out to be an MIT-educated physicist who went to work on Wall Street because of the higher pay. Another character was once an engineer.  Some have also observed that it was these types of people, with their mathematical and technical acumen, who conceived of the complex financial instruments which helped precipitate the crisis.
The film also discusses the extravagant lifestyles enjoyed by Wall Street traders.  Various characters seem to have extended themselves financially despite their immense wealth (or perhaps because of it).  Spacey plays a burned-out trader who wants to get out of the business, but decides to stay at the end of the film because he still needs the money after a lifetime working in the industry.
Irons, who plays the unnamed firm’s CEO, tries to rationalize the disaster at the end of the film, telling Spacey that the crisis was unavoidable because it is just another in a series of bubbles that have occurred throughout the history of capitalism.  This seems to be an echo of the explanations, or one might argue, rationalizations, provided by the heads of major investment banks since 2008. In their minds, new regulations like Dodd-Frank are unnecessary because the debacle of the last few years was not due to their irresponsible and unethical behavior, but due to forces beyond their control.


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