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In the movie Margin Call (2011), Peter Sullivan who is a Risk Analyst (not a partner or major investor in the firm), after being given a thumb drive with some data, discovers late at night (once everyone has left) that the firm he is working for will very soon be bankrupt once some MBS (Mortgage Backed Securities) products lose a fraction of their value. The data shows that the firm has essentially ignored the risk of their assets while the market is starting to turn into a recession.

Considering that Peter is not a high-ranking member of the firm (later in the film, it's made very clear that he is attending meetings with people who are so high-up in the firm he has never seen or met them), has no known worthwhile contributions in the firm (it can be inferred that he has not been there for a significant period of time and no financial stake with the firm) and has no real incentive to do anything (again, he's not a partner or important individual at the firm).

Obviously an employee should help their company but consider that the data shows just how damaged of a state the firm is in, the likelihood he will be let go very soon (the firm has already laid off his boss and dozens of other employees), and the fact that he's basically a nobody there (and nobody knows he has the data). There does not seem to be a valid reason for his character to speak up or do something.

Why would he do anything or be as concerned as he is? Is there prerequisite knowledge assumed by the filmmakers that is just not known? Is it something related to financial services and the investment banking industry?

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According to this article:

Imagine if Merrill Lynch had been smarter, like Goldman Sachs, a few years ago. The investment bank would have realized it was holding too many dodgy mortgage securities and sold them off to buyers who didn’t yet think the market would blow. Those clients might have then landed in trouble. But Merrill would have avoided a fire sale to Bank of America.

That’s the basic premise behind the latest film to emerge in the financial crisis genre, “Margin Call.”

[...]

Of course, all this sounds a bit like the story of Merrill Lynch. The firm found itself with tens of billions of dollars of similarly dodgy mortgage securities it couldn’t sell and whose losses threatened to overwhelm its capital. As Lehman Brothers was going under, Merrill had to sell itself to BofA in a hurry three years ago in September.

But “Margin Call” posits a different end for its fictional firm. Over the course of a few hours, Chief Executive Tuld, whose name rather obviously rhymes with that of Lehman’s disgraced ex-boss, convinces his troops that they must sell every lick of MBS on the balance sheet, knowing full well that the assets are essentially worthless.

So the movie promotes a kind of "what if" scenario. But why?

In reality, dumping massive amounts of mortgage bonds in a heartbeat before everyone else had worked out they were toxic would have been nearly impossible. But the fictional dilemma is one worth considering – at least for the director it was. His father was a senior executive at Merrill.


As for Peter's motive: if he helps save the firm, there's a good possibility he gets to keep his job (or even a promotion). Plus: if it happened at this firm, there is a good chance it also happened at other firms, so sending out resumes in the hopes of scoring a new job at a time when the market is flooded and there are fewer job opportunities isn't exactly a wise strategy.

But IMHO this is a movie that isn't about the people involved in the story, this is a movie about the systems (and their failures), and a fantasy as well. Looking for motivations and character arcs etc. is pointless, that isn't what this movie is about.

Note that (this is a quote from Wikipedia):

the plot has similarities to some events during the 2008 financial crisis: Goldman Sachs similarly moved early to hedge and reduce its position in mortgage-backed securities, at the urging of two employees, which essentially mirrors Tuld's comment about the advantage of moving first.

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  • But why would he, Peter, specifically report the problem or be concerned? Considering he's likely to be let go (either eventually or because of that issue [like his boss]) and has no stake in the firm. it makes more sense for him to just go "well, that's bad ... better start emailing my resume or just lay low and plan my exit strategy"). Especially since he was, essentially, the entire risk division at that point and nobody else really knew what he does (characters commonly say this). It makes no sense, from a personal POV, that he would feel the need to do anything. – David Mar 1 at 19:12
  • @David I've updated my answer; check the new section at the bottom. – BCdotWEB Mar 2 at 7:59
  • I think the part of the answer "If it happened at this firm [it's happening else where so jumping ship is not going to improve anything so might as well try to fix it if possible]" is probably the closest to the most logical answer. It even makes sense considering Ramesh Shah's dialogue in a later sequence "It's only a matter of time until someone else comes with the exact same thing, if they haven't already". – David Mar 3 at 17:27
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    Peter was promoted at the end of the film, so for him it works very well. – Candid Moe Mar 8 at 19:29
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    @CandidMoe Looking at the movie, he is probably just the next scapegoat for the firm. His boss: Eric Dale and his boss: Sarah Robertson both were scapegoated away for the problem for mostly political reasons / for the senior managers to save face. As I said in an earlier comment, the only logical or good reason for Peter's action is: "every other firm is in the same boat therefore the grass isn't greener anywhere else". – David May 29 at 5:15

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