A quarterly magazine of urban affairs, published by the Manhattan Institute, edited by Brian C. Anderson.
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Greed Is Not Good
A new film takes the measure of post-millennial Wall Street.
28 October 2011
Using a tool that earnest Zuccotti Park protesters lack—precision—first-time writer and director J. C. Chandor has produced a devastating critique of pre-2007 Wall Street. Opening in theaters last week, Margin Call tells the story of a night in the life of a group of financiers as they save their firm, if not their own psyches. The unnamed firm is a cross between Lehman Brothers and Goldman Sachs, if there could be such a thing. The wizened risk manager, Eric Dale (Stanley Tucci), loses his job. Escorted to an elevator of the buildings mid-Manhattan high-rise, Dale hands off a memory stick to a junior colleague, Peter Sullivan (Zachary Quinto), telling him to be careful. As his colleagues hit the after-hours clubs, Sullivan stays at his desk, crunching numbers—and glimpses his employers possible downfall.
What Sullivan learns is that the firm doesnt have enough capital to withstand a decline in the value of its mortgage-related securities. He calls his boss, Sam Rogers (Kevin Spacey), back to the office. Rogers is disengaged; hes more consumed with keeping his dying dog alive, spending $1,000 a day in medical costs. But he grasps enough to summon the CEO, John Tuld (Jeremy Irons). Tuld swoops down in the small hours via helicopter to make a clinical decision: the firm will cut its losses, selling its toxic securities the next day before anyone understands that theyre worthless or that the financial system itself—built upon similar toxic securities—is going down. Tuld quells his traders concerns about the career impact of selling trash to trusted customers with the promise of $2.6 million individual bonuses if the effort proves successful. Thus the films title: Tuld is taking action before the firms creditors can call for margin—that is, more cash—to back its plummeting securities.
The films irreconcilable private conflicts make for rich drama. Each character must grapple with the cognitive dissonance of making so much money for doing little to help the real economy—and even harming it instead. In Margin Call, easy money is a psychological prison, not a glittery end that justifies any means.
Thats a departure from previous financial-movie scripts. The New York Timess Michael Grynbaum notes correctly that Peter [Sullivan] is no Bud Fox, the protagonist of Oliver Stones classic Wall Street. In the 1987 film, Fox breaks insider-trading laws to climb the ladder to riches in Gordon Gekkos greed is good world, eventually ratting out Gekkos role in the crime to avoid a long prison sentence. Stone envisioned Wall Street as a cautionary tale of what happens when you sell your morals for money. Instead, young viewers saw the movies stylish props—fast cars and faster girls, early-model cellphones, and park-view apartments—as well worth the risk. They flocked to the Street, having determined that Foxs only mistake was getting caught.
Stone tried to correct this failure in Wall Street 2: Money Never Sleeps, which came out in 2010. The long-deferred sequel followed Gekkos post-prison resurgence to the highest levels of finance to show, in the end, that he hadnt learned much. Greed had irrevocably corrupted him. But the story left audiences with a more perverse lesson: that being anything but super-wealthy was so abjectly miserable that Gekko had no choice but to claw his way back up, while using money to paper over the personal problems his ambition had created.
In contrast, Margin Call presents the opportunity costs imposed when people fall for the illusion of effortless wealth. In their middle-of-the-night meeting, when Tuld wants to know Sullivans credentials, the younger man informs him that hes an MIT-pedigreed rocket scientist. Why, then, is he in trading? Because it pays. Meanwhile the middle-aged Dale, sitting with a colleague on the stoop of his brownstone after being fired, muses that as a young engineer, he built a bridge over the Ohio River. Dale talks through some impressive math to demonstrate how many hours the bridge has saved drivers over the decades. He thinks hes wasted his own talent since then. Sullivan is on the cusp of doing the same. These characters serve as fitting stand-ins for the West itself, which is emerging (maybe) from a quarter-century of dominance of the too-big-to-fail financial industry.
Near the end of the film, Rogers takes a half-hearted stand, telling Tuld that he doesnt want to hurt their customers. Tuld attempts a Gekko-like defense of the practice. Finally Rogers relents and says hell stay, but not because of your little speech. Rather, despite the millions hes made, he needs the cash. The film concludes with Rogers burying his dead dog in the yard of his former home, now his ex-wifes. Its hard to imagine Margin Call becoming an accidental Wall Street recruitment video.
Nicole Gelinas, a City Journal contributing editor and the Searle Freedom Trust Fellow at the Manhattan Institute, is the author of After the Fall: Saving Capitalism from Wall Street—and Washington, now out in paperback.