New York Law School

Art Leonard Observations

Margin Call – a “must see” film

Posted on: October 24th, 2011 by Art Leonard No Comments

Yesterday evening I attended a screening of "Margin Call," the new film written and directed by J.C. Chandor, at the newest place in town to see films: the Film Society of Lincoln Center's new theater beneath the plaza off 65th Street.  The theater is wonderful and I hope to return soon, since it features comfortable stadium seating and excellent digital projection and sound.  But the main feature is the movie, not the theater.

"Margin Call" looks into the world of the big investment banks and focuses on the reaction within one such entity to the discovery that the financial formula they have been following falls so far outside the parameters of prudent risk that the company is in danger of going under if they can't unload a portfolio of almost worthless securitized mortgage vehicles quickly, before the market catches on. 

This may not sound like a recipe for high drama, but it actually is in the hands of an extraordinary cast and a talented writer/director.  I found every minute absolutely gripping, and the performance by Kevin Spacey in the leading role of a high-level manager who is confronted with what may be the greatest moral/ethical challenge of his career is just superb.  Spacey nails it. 

But so does the rest of the cast.  Jeremy Irons as the head of the firm is terrifyingly spooky at first – but then you come to hate his character, which you are supposed to do.  On the other hand, one has the utmost sympathy for the characters played by Stanley Tucci and Zachary Quinto, who discover the error and – in the case of Quinto – have the courage to blow the whistle internally. 

But actually the social comment in this film is about how all of these "ordinary people" doing their "ordinary jobs" that involve moving millions and billions of dollars back and forth are — or at least act as if they are — totally amoral but struggle to believe that they are really very moral.  The movie is heavily about the ethical challenges of surviving in that kind of corporate environment.  I was with a friend who is employed in that world, and he nodded his head quite a few times as the movie unfolded.  Although this is a dramatization, much of it really rang true to him and me. 

I think it is an important film for people to see, to try to understand what went wrong in the run-up to the Great Recession that we have recently experienced, and to understand why more, not less, regulation of the financial services field is absolutely necessary.  Those who are trying to weaken Dodd-Frank and loosen regulations are playing a fool's game.  The major lesson learned from the investigations into the Great Depression of the 1930s was that bankers left to their own devices will generally give in to the temptation to take too much risk, because the biggest short-term profits come from taking the biggest risks.  But in the long term we have a crash and lots of people get hurt.  Regulations put into place in response to the Great Depression stayed in place through one of the greatest periods of prosperity in our history — giving rise to false confidence that the sins of the past would not recur, resulting in deregulation and bankers running wild — with the foreseeable results.

We're all paying for it now as taxpayers, as the government went into massive debt with unduly large tax cuts and then spent billions to bail out the big financial institutions who had abused the deregulatory environment.  See this film and weep as the new craze for deregulation takes shape.

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