Margin Call

101 mins, rated MA 15+, opens 15 March 2012.

By MICHELE ASPREY, Lawyer

(This is my review as published in the March 2011 issue of The NSW Law Society Journal)

Margin Call is a financial thriller – a fairly recent genre in film, which includes Wall Street (1987), its sequel Money Never Sleeps (2010), The Company Men (also 2010) and Up in the Air (2009).

Margin Call shows us 36 hours in the life of a fictional Wall Street investment firm on the brink of the global financial crisis. It begins with a brutal exercise in “downsizing” at the firm, and ends after a desperate attempt to avoid the financial meltdown, not just of the firm, but of Wall Street and beyond.

First-time writer-director JC Chandor aims to be financially literate, and makes a brave attempt to explain exactly what has gone wrong with the firm’s investment strategy. In this, he has the valuable assistance of brilliant actors such as Stanley Tucci as Eric Dale (a risk analyst who begins to unravel the truth, but is peremptorily made redundant), Paul Bettany as a middle-level executive, Kevin Spacey, head of the trading floor, and Jeremy Irons, the CEO who arrives by helicopter to sort things out. Australia’s Simon Baker is chilling, too, as a duplicitous senior executive.

These men – and they are all men, apart from Demi Moore as the firm’s Chief Risk Officer – are masters of the financial universe, and very richly rewarded. But there’s a running joke that the higher up the management chain, the less financially literate they are. Almost the first thing Jeremy Irons’ character asks is to be spoken to in plain English: “Speak to me as you might to a young child – or a golden retriever,” he says. Irons’ CEO is called John Tuld (a not-so-subtle reference to Lehman Brothers’ CEO Richard Fuld).

The only one with a handle on the problem is Peter, the young analyst who finishes Eric’s detective work. He’s played by Zachary Quinto, who was Spock in the 2009 Star Trek remake, and co-produced Margin Call).

Director JC Chandor claims to understand the finance industry because his father worked for Merrill Lynch for nearly 40 years. His characters seem more human than bankers and executives normally do on film. There are no monsters here, just hard-working people who have made the wrong choices, probably through greed and misplaced loyalty to a firm with no moral compass.

But the film’s authenticity is only skin-deep. For example, Peter explains that the firm packages its products in several tranches, and that it takes about a month to “layer” them, meaning they have to be held on the books for some time, which normally wouldn’t be desirable. But as they are “just mortgages”, the firm can break the rules and not comply with prescribed “limits” (which I think the film calls “historical volatility index limits”). Projecting forward, Peter says, if these assets decrease by 25% and remain on the books, the loss would be greater than the market capitalization of the whole firm. Result? Total disaster.

In fact, if you unpack the jargon, don’t those products sound like duds from the start?

On the other hand, there are several cracking monologues (in particular, two by Spacey and one by Irons) that really bring the issues down to tin-tacks and lay out the arguments for and against the capitalist system.

Lawyers may be annoyed when they find that there is no actual margin call in Margin Call. No lender decides that shares provided as security for a loan have lost value, requiring that their security be topped up in cash or in extra shares. What actually happens by way of “margin call” is that there’s a huge sell-off of the dud financial products over just one day, at enormous risk to both the firm and the market itself. Against the odds, it’s a tremendously suspenseful set piece.

For a film that was shot in 17 days on a low budget, it looks and sounds very slick. Perhaps there are a few too many shots of the NYC skyline, and some of the dialogue is clichéd: “It’s a long way down,” says Paul Bettany’s character, as he goes to sit on a railing on the roof of a skyscraper. Nevertheless, JC Chandor and his fabulous cast give us a fresh look at what led to the (last) GFC, and some of the people who took us to the brink.