“Margin Call,” a recently released DVD is about the beginnings of the crash of the housing bubble and the associated financial fallout.
It’s a very thoughtful film. It is about recent history and to some extent, attempts to rewrite history in a very unusual way.
I am used to Hollywood demonizing big business.
Hollywood sometimes goes over the top in depicted corporate malice. “Margin Call” did the opposite. The questionable ethical behavior exhibited by the financiers in the film did not hold a candle to the amoral and predatory behavior exhibited by real-life counterparts.
There are some mild spoilers ahead, but if you are sensitive to that, you may wish to stop reading here.
A firm buys mortgages and bundles them into mortgage backed securities and resells them and buyssuch bundles from other firms, re-packages and sells them. They begin to realize these “assets” may be next to worthless and if they are caught with too many of them on the books, the firm will be insolvent. That matches what happened recently.
The moral conflict is how to extricate themselves from this dangerous financial position. One option is to quit buying and sell all assets quickly. Such a strategy would involve losses, but those who sell first would take less of a hit than those left holding the toxic “securities.” No firm wants to be the first to end a lucrative business of trading possiblyworthless pieces of paper back and forth. A vulturelike Jeremy Irons plays the suave, yet repulsive, head of the firm who will make the final call.
I only wish that the worst thing that the high-flying financiers did in all this mess was sell their junk to other willing buyers in the industry at a loss. The truth is that this action, portrayed as so dark an option in the film, was the picture of innocence compared to what their real-life counterparts did. Hollywood simply cannot demonize the financial elite. It lacks the imagination necessary to go beyond their actual villainy. The film actually humanized them and greatly soft-peddled what actually went down.
The history is that firms like Goldman Sachs sold their toxic assets not just to other firms like themselves, but to their own clients.
And while one part of the operation was selling these things to their clients as a good investment, another part of the firm was making bets that those investments would fail. Then, when they failed to offload their junk on willing buyers in time, they used their pull with the politicians to make you and me unwilling buyers of those assets through various forms of bank bailouts. We, via the Federal Reserve and/or the Treasury, now hold a lot of the trash they could not convince anyone else to buy.
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Editor’s note: Mark Moore is the lead writer for an Internet blog on matters pertaining to Arkansas culture and government, Arkansas Watch, and on Tuesday nights is the host of an Internet-based radio program, Patriots on Watch. He can be reached through The Times at [email protected].
Opinion, Pages 4 on 02/01/2012