Sunday, February 19, 2012

Margin Call

Sam Rogers (Kevin Spacey) during the moment of truth

Margin Call (U.S., 2011) directed by J.C. Chandor, 109 minutes
Nominated for One Oscar:
Best Original Screenplay

This clever film just disappeared into the ether despite an excellent cast featuring Stanley Tucci, Zachary Quinto, Paul Bettany, Simon Baker, Kevin Spacey and Demi Moore. I suspect two things frightened potential film goers: a very un-sexy title that gives you no hint as to what the film is about unless you are familiar with financial terms (please see definition below at the end of blog post) and the perceived murkiness of trying to untangle these minute details of financial mess of 2008 despite the film's best efforts to explain them.

As Seth Bregman (Penn Badgley of Gossip Girl fame) and Peter Sullivan (Zachary Quinto better known as the newest movie version of Star Trek's Spock) watch the human resources team decimate the trading floor of their investment bank (loosely modeled on Lehman Brothers) including firing Peter and Seth's boss, Eric Dale (Stanley Tucci), the head of  risk management, Peter is left with a disturbing last message from Eric who hands Peter a USB drive that contains a project he had been working on and advises him to "be careful".

Peter (Zachary Quinto) completes the project and discovers (okay, hold on to your hats because I struggled with this too): "trading will soon exceed the historical volatility levels used by the firm to calculate risk. Because of excessive leverage, if the firm's assets in mortgage backed securities (MBS) decrease by 25%, the firm will suffer a loss greater than its market capitalization." MBS values took a hit when the housing market tanked in 2007. They are now virtually worthless. Suffice it to say that this ain't good for the company.

What absolutely floored me is that senior exec after senior exec refuses to look at the financial data prepared by the junior executive Peter Sullivan, who is referred to as a rocket scientist, because they don't understand the data before them. Neither do we. Peter must interpret the dire financial warnings contained in Eric's work for them (and us).

This precipitates a crisis overnight with the junior employees remaining at the firm all night with more senior executives trying to puzzle out if this information is true and then what, if anything, can be done about it. This meeting includes Sam Rogers (Kevin Spacey), division head Jared Cohen (Simon Baker), chief risk officer Sarah Robertson (Demi Moore) and the suave but vaguely sinister CEO John Tuld (Jeremy Irons). When in need of a suave villain, call in a Brit ...

Jared Cohen suggests a quick sell of all the toxic assets before the market can react, Tuld agrees. Rogers warns that once the worthlessness of the sales is revealed all business ties will be severed and the reputation of the company destroyed. Tuld is willing to take that chance.

Sam Rogers, head of the trading floor, can be as sleazy as the rest but there's a core of cynical honesty in him that can't be dulled even by the machinations of the corporation.
Peter Sullivan: Aren't you tired?
Sam Rogers: A little ... but I don't work as hard as you do.
Peter Sullivan: That's not true.
Sam Rogers: No it is. 

Eric Dale (Tucci) is sent for after he returns to his Brooklyn home and he is persuaded to come back with the threat that his severance package and health care package will be challenged if he doesn't. Several senior execs were aware of the impending crisis but did not act. The diabolical Tuld plans to offer Robertson (Demi Moore) as a sacrificial lamb to the board and tries to persuade Sam Rogers (Kevin Spacey) to remain on board.

The script is cleverly very subtle in revealing the unscrupulousness of these guys. Sam Rogers (Kevin Spacey) weeps imagining the death of his dog who is very ill with cancer at the very moment that 80% of his staff is being eliminated by Human Resources outside his very office. Robertson (Demi Moore) and Cohen (Simon Baker) literally argue over the head of a silent (and probably non-English speaking) cleaning woman in the elevator about who should take the fall for this economic disaster as if she is invisible (and likely she is to them) even though their actions will affect a great number of low income people in just such jobs. Cohen calmly shaves in the bathroom while listening to a junior employee (Badgely) quietly weeping in one of the stalls when he realizes what is about to come.

Finally on board with Tuld's plan, Sam Rogers tells his traders they will receive massive bonuses in the seven figures if they sell 93% of the MBS toxic assets that he describes as being part of a "fire sale". They are, in effect, both destroying their careers and their relationships with their clients by participating in this move. The team reaches the 93% mark just as the same human resources team begins another round of layoffs. Rogers confronts Tuld, asking to be allowed to resign, but Tuld assures him that this is simply part of the economic cycle (citing many other crisis) and urging him to remain as there is a great deal of money to be made from the coming crisis.

In the final scene, Rogers is tearfully burying his dog in his ex-wife's front lawn. After comforting him for a few minutes she warns him that if he tries to enter the house the alarm will go off. A fitting ending, every man for himself and that includes dead dogs too ...

*A margin call is an order by a brokerage for an account holder to deposit more cash or securities into a margin account when the value of the cash and securities currently in it falls below some defined percentage. Every margin account has a maintenance margin requirement, which is money or securities an investor must keep in his/her margin account in order to be able to borrow from the brokerage. (Source:

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