Here in the Prime Screening Room, I highlight Amazon Prime Instant Videos that are not only free for Prime members to watch, but definitely worth the cost of the rental or purchase for everyone else as well.
Today’s pick: Margin Call (R, 4/5 stars avg Amazon review rating, currently FREE for Prime members to view, currently priced at $6.99 to buy)
Margin Call tells the chilling, fact-based story of the first 24 hours of the current, nationwide financial crisis that eventually ruined hundreds of banking and investment firms, drained millions of dollars from employee retirement funds around the country, popped the mortgage bubble, set the stage for the government bailout of banks, and launched the 98% movement.
The amazing cast includes Kevin Spacey (American Beauty), Jeremy Irons (The Borgias), Zachary Quinto (Star Trek, American Horror Story), Paul Bettany (Priest), Simon Baker (The Mentalist) and Demi Moore (A Few Good Men).
Margin Call focuses on the decisions made, and actions taken, by a handful of individuals working at one firm on one day, but it’s knowing the eventual outcome of that single day that makes the movie so riveting—and even a little horrifying. This gigantic firm would be the first in a long line of falling dominoes, this firm would be the one to collapse the house of cards Wall Street had become, and the executives at the firm knew it. A little background may be required here, for anyone who hasn’t been following the financial crisis:
Mortgage Backed Securities are an asset type that was invented by investment bankers in the mid-1990’s. In an MBS, large pools of mortgage notes are grouped together as a single asset, mixing stable, reliably paid home loans together with those at higher risk of foreclosure, in order to reduce the overall investment risk. Once such a pool of MBS’s is formed, the investment bank sells shares of the MBS asset to investors. This practice is at the root of the current mortgage and financial crisis, for two reasons.
First, the banks that pooled the mortgages rarely followed proper procedures or filled out the correct paperwork to ensure ownership of the notes was correctly re-assigned to the MBSs; once mortgages have been pooled in this way it becomes difficult to prove who actually owns a specific mortgage note, and therefore if such a mortgage goes into default, it may be unclear who has the legal right to foreclose. This is the problem that resulted in the “robo-signing” scandals, where banks tried to go back and create the necessary documentation after the fact by having lower-level employees fake the signatures and dates that should’ve appeared on the original paperwork. Second, the MBS pools typically contained many more high-risk mortgages than stable ones, but this information was not disclosed to investors.
As the film opens, the firm is laying off 70% of the workforce in some key departments, including Risk Assessment. Risk Assessment Manager Eric Dale (Tucci) has been working on an analysis of the firm’s MBS holdings, and has found some red flags but can’t finish his analysis now that he’s being downsized. Dale passes his findings on to an analyst who remains in the department, Peter Sullivan (Quinto).
Sullivan digs into Dale’s research and discovers the firm’s MBS holdings have been grossly over-valued. If the values were to be corrected just for the past several days’ worth of trading, the firm’s own stock would drop over 25%. If the MBS values were to be permanently corrected and disclosed to investors, the firm’s losses would be so catastrophic that the firm would be immediately bankrupted.
Top executives are called in, in the middle of the night, including the firm’s CEO, John Tuld (Irons). As Tuld tells his head of trading, Sam Rogers (Spacey), his philosophy is that there are only three ways to win in the securities game: be first, be smarter, or cheat. Tuld orders Rogers to have his staff dump all of the MBSs as quickly as possible. Rogers is conflicted, knowing the MBSs are worthless and will ruin the portfolios of any investors that buy them; he knows he is being asked to lie to clients with whom he’s built relationships over years, and that selling the MBSs will ruin the careers and reputations of everyone involved in those trades. He knows many of the firms who buy the MBSs will be bankrupted as a result.
Astonishingly, Tuld doesn’t see the MBS dumping as “cheating”, which he proudly proclaims is something he would never do. Instead, Tuld sees it as ‘being first’. He informs his staff that this MBS problem doesn’t come as a complete surprise, it was a good ride while it lasted and made lots of people rich, but now the party’s over and whoever’s first out of the door can emerge from the collapse unscathed—as individuals, at least.
Tuld has Rogers promise his traders multi-million dollar bonuses if they can dump 97% of the MBSs the following morning. The traders are warned that the day’s work will derail their careers and destroy the trust they’ve spent years building between themselves and their clients, but since a collapse of the entire market is imminent, their careers will soon be in jeopardy anyway. The traders are ordered to work quickly and keep any sign of trouble hidden from their clients, since the truth of the matter will be known by early afternoon, once the analysts at other firms start looking more closely at the MBSs their own firms have just purchased.
My Take
This is one of those rare cases where knowing how the story ends only serves to make the movie more gripping.
Who among us has not been negatively impacted by the actions of that one firm on that one day? Who among us hasn’t lost a job, home, retirement account or savings as a result of that fateful day’s ripples through the economy? Who among us has not asked in frustration, “How could this happen?!” Margin Call answers that question.
The performances were great, across the board. The only detail that threw me a bit was in Bettany’s portrayal; he’s a British actor who speaks in his normal voice for the most part but sometimes slips into a heavy American accent. I think this was a conscious choice on his part, to have his character occasionally deliver an American expression in a thick, New Yorker type of accent.
This movie makes the decisions and actions that launched our current financial crisis comprehensible, if not understandable. You can comprehend why the people involved did what they did after seeing this movie, and if you ask yourself what you’d have done in the place of those rank-and-file traders, you may have to admit you’d have done the same. After all, made privy to the fact that financial ruin is just around the corner no matter what anyone might do, who wouldn’t act to protect himself and his family?
But the decisions and actions of Tuld are not understandable. He is the one who gave the rank and file their marching orders, he’s the one who knew what the outcome would be. He also knew that if his firm weren’t the one to set off this ticking time bomb, it would be swept away in the tidal wave of debt and legal problems that have plagued every other investment bank ever since the crisis began. Irons is, as usual, marvelous in his portrayal of a cold, calculating man who’s capable of doing great evil while still imagining himself a highly moral man. For more of the same, see Irons in The Borgias.
I rate this movie 5/5 stars. Highly recommended to anyone who wants more insight to our nation’s current financial woes.