What’s a “margin call”?
That’s when your broker calls and asks for more money on account of your rapidly mounting losses — due, in your case, to a series of spectacularly ill-judged investments in exotic southern European debt instruments.
Ah, you mean the day I had to sell the Maserati?
The “Maser call”, yes. Who knew that Greece could write off half its debt without triggering a payout on its credit default swaps?
My thoughts exactly.
So what’s the movie about?
It portrays 24 hours in the life of an investment bank during the height of the financial crisis in September 2008. The movie opens with the degrading experience of a mass redundancy — a tap on the shoulder from human resources, the surrendering of company property, the sudden demand for cardboard boxes and, ultimately, a security escort out of the building.
Are they trying to make us feel sorry for bankers?
It’s more about portraying the bank itself as a kind of inhumane financial monster. Such behaviour is regrettable, but necessary, as an HR manager explains to one of the bank’s outgoing veterans: “Unfortunately, due to the highly sensitive nature of your work here, the firm has to take certain precautions, for security purposes, that may seem punitive in nature. I hope, considering your over 19 years of service to the firm, you will understand that these measures are in no way a reflection of the firm’s feelings towards your performance or your character.”
The banker is confused by what’s happening, so another member of the HR team chips in to further explain: “She’s apologising for what’s about to happen.”
I’m sure his deal softened the blow.
Of course. In fact, as the head of risk management, it turns out that he’s one of the few people who understands how serious the bank’s position is — and has been trying to make himself heard for years. The bank lures him back to the office with a huge payment so they can lock him in a room while they deal with the crisis.
How bad is it?
Bad enough to get the chief executive into a helicopter to chair an emergency meeting in the middle of the night. Addressing a former rocket scientist who works in the risk management team, he asks for things to be kept simple: “Speak as you might to a young child or a golden retriever; it wasn’t brains that got me here, I can assure you of that.”
Is the CEO based on anyone in particular?
He’s called John Tuld — a name that is apparently a combination of John Thain and Dick Fuld, then chief executives of Merrill Lynch and Lehman Brothers.
So is the fictional bank based on Merrill or Lehman?
Well, the bank doesn’t go bust or get bought, so it’s probably not based on either of them.
How does it survive?
The bank discovers the mountain of junk on its balance sheet before the market has realised the scale of the problems facing the banking industry, so it decides to be a first-mover by dumping the entire position on anyone they can fool into buying it.
And so the crisis starts?
Pretty much. There’s a nice moment in the movie, echoing the Robert Duvall scene in Apocalypse Now, when a couple of bankers smoking on the street notice a wave of helicopters flying into Manhattan before the markets open to the firesale. “They’re all coming now,” says one.
What will bankers learn from the movie?
There’s a sermon towards the end, when a senior trader scolds a morose new boy for worrying about the effect of the impending crisis on “real people”.
“The only reason they get to continue living like kings is because we’ve got our fingers on the scales in their favour. I take my hand off and then the whole world gets really fair, really quickly — and nobody actually wants that. They want what we have to give them but they also wanna play innocent and pretend they had no idea where it came from. That’s more hypocrisy than I’m willing to swallow.”
The financial crisis summarised by a trader...
Yes (minus the expletives). The director’s dad, Jeff Chandor, worked on Wall Street for 40 years, mostly at Merrill, so it’s a tirade he might have heard before.
