Saturday, November 5, 2011

Review of ‘Margin Call’

Saw the hot new Wall Street movie “Margin Call” last night with a special appearance from New York City via Skype of the director, whose father, it turns out, was a New York City investment banker.

The movie sugar coats the cynicism of the investment bankers.  Kevin Spacey gives a nice portrayal of a long time investment banker and trader who knows that screwing one’s customers is not good for repeat business. 

But the movie merely makes the greatest sin of its Goldman Sachs-like fictional firm (GS-like because it doesn’t go bankrupt) the beat-the-crowd unloading of its tons of merde, toxic MBS assets that a young engineer quant has figured are going to bankrupt the firm in an environment of increasing levels of market volatility, due to the extreme leverage the firm has put on.

No, JC Chandor backs off of showing what really happened, which was that some investment banks and colluding hedge funds actually shorted the same securities they were selling at the same time.

Most people would call that fraud.

JC Chandor missed the opportunity to capture the truly depraved language of the traders, which has been displayed in transcripts of Enron’s traders’ conversations and emails. 


When a forest fire shut down a major transmission line into California, cutting power supplies and raising prices, Enron energy traders celebrated, CBS News Correspondent Vince Gonzalesreports.

"Burn, baby, burn. That's a beautiful thing," a trader sang about the massive fire.

Four years after California's disastrous experiment with energy deregulation, Enron energy traders can be heard – on audiotapes obtained by CBS News – gloating and praising each other as they helped bring on, and cash-in on, the Western power crisis.

"He just f---s California," says one Enron employee. "He steals money from California to the tune of about a million."

"Will you rephrase that?" asks a second employee.

"OK, he, um, he arbitrages the California market to the tune of a million bucks or two a day," replies the first.


Though Mr. Tourre was a more junior member of the Goldman team, the S.E.C. case against him was bolstered by colorful e-mails he wrote, calling mortgage securities like those he created monstrosities and joking that he sold them to “widows and orphans.”

I have a number of investment banking and hedgie friends, and I find all of them extraordinarily double-minded when it comes to the ethics of what they do.  In that regard, Spacey’s character accurately reflects the tensions some, if not all, folks in the toxic Wall Street environment feel.

But the movie Disney-fies the moral dimensions of what Wall Street has become in recent years. 

Too bad. 

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