Brilliant “Margin Call”

by Leigh on November 16, 2011 · 0 comments

in Economy,Management

“Margin Call” is not just another Wall Street movie.  It is the best movie I’ve seen in this genre and one that tells the inside story of how a financial institution collapsed.

“The movie is a fictionalized account of a disastrous twenty-four hours in 2008, when ‘financial instruments’ that had seemed solid dissolved into air. The rush of panic is halted, now and then, by moments of disbelief,” writes David Denby in “All That Glitters” in his New Yorker column “The Current Cinema” (October 31, 2011).

To set the scene, Denby writes that “the executives working late at an imperilled investment firm in Manhattan stand in an office tower and stare at the lights and the streets below, wondering if the great city isn’t a dream.”  It was a bad dream that night.

There are three major elements of management that I found of interest in the movie.

1.  Respectful listening.  As the movie opens, personnel executives are on a trading floor to find and speak with those who are being let go that day.  Eric Dale (Stanley Tucci) sits in a state of shock while one woman recites what is included in his package and the deadline for accepting it as the other woman hands him her card in case he has any questions.  When Dale is back in his office, he looks up to see the ‘pit boss’ Will Emerson (Paul Bettany).  Dale tells Emerson that he needs more time since he had to finish an important project.  Emerson follows company policy and tells Dale that other people can finish his work.  Knowing the importance of his work, as Dale is escorted out of his office he slips a thumb drive to one of the analysts and says, “Be careful.”

2.  Risky business.  The young analyst, Peter Sullivan (Zachary Quinto), gave up an evening of drinking with other analysts to remain at work and take a look at Dale’s files.  It didn’t take him long to see that:  “if the mortgage-backed securities currently on the company’s books, which are heavily leveraged, decline in value by an additional twenty-five per cent, the company’s losses will be greater than its total market capitalization.”  What had become a quiet office with only the custodians at work became overnight a scene of people trying to make good on what was a devastating reality. 

Sullivan called another analyst, then the pit boss Emerson who called the longtime head of trading Sam Rogers (Kevin Spacey) who called his boss Jared Cohen (Simon Baker) who called in more staff and finally called CEO John Tuld (Jeremy Irons).  While sitting around the table with quickly prepared bound documents summarizing what Sullivan found, those who could read the numbers understood what was happening; other senior people seemed to have forgotten or never learned how to read projections and, instead, trusted a 28-year-old analyst with a Ph.D. in rocket science to convey the implications of the data.  Sullivan took the risk to open the files Dale left him and found himself being the point person for telling the top executives the truth about their company.

3.  Motivated blindness.  I read this term in David Brooks’ op-ed column “Let’s All Feel Superior” which appeared in the New York Times on November 15, 2011, about the sexual abuse scandal at Penn State.  Brooks defines motivated blindness as “they don’t see what is not in their interest to see.”

Top risk officer Sarah Robinson (Demi Moore) took the fall for the financial fiasco that developed.  However, during the first meeting she attended Sullivan’s finding, she reminded her boss Cohen that she and others had brought the topic to his attention on previous occasions and he had ignored them.  “…the toxic assets were assembled in the first place, and were sold well past the danger point, because the fees from doing so were high enough to extinguish caution,” Denby writes.  Cohen had motivated blindness and didn’t see what was not in his interest.

“If Wall Street executives find themselves at a loss to understand what the protesters outside are getting at, they could do worse than watch this movie for a few clues,” Denby wrote.  I agree with him.  Go see “Margin Call.”

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