Essay

‘Margin Call’: Using Film to Explore Behavioural Aspects of the Financial Crisis

Andrea Werner

Received: 22 November 2012 / Accepted: 17 June 2013 / Published online: 26 June 2013

� Springer Science+Business Media Dordrecht 2013

Abstract The aim of this article is to show how the

critically acclaimed and award winning film Margin Call

may be used in business ethics teaching. Set in a fictional

investment bank at the dawn of the financial crisis, the film

zooms in on the motivations and decision-making of peo-

ple who had much to lose from the crash of the hitherto

very profitable mortgage-backed securities market. The

film offers rich material for analysis of behaviours that

contributed to the crisis. The article will set out topics for

classroom discussion, including the impact of incentives

and power structures, contextual factors that distance

people from the consequences of their actions, and con-

siderations of how the banking industry may be

transformed.

Keywords Financial crisis � Film � Teaching � Descriptive business ethics � Rationalisations

Introduction

There are few events that have had such profound effects

on the economy and society at large in recent years as the

financial crisis, which forced governments to bail out banks

that were ‘too big to fail’, and which, in turn, led to mas-

sive national debts and affected governments’ ability to

provide social welfare and stimulate their economies. As

the world has been watching the financial crisis and its

aftermath unfold, one could not help but wonder how this

crisis was allowed to happen.

Numerous books (e.g. Mason 2009; Barth 2009; Stiglitz

2010) and documentary films such as Inside Job (Biktim-

irov and Cyr 2012) have been attending to this question.

They map out the complex interactions between global

structural imbalances with regards to trade, saving and

investment and government debt; a deregulated financial

market; low interest rates and the availability of cheap

credit; the development of new financial instruments

enabling the securitisation of risk and thus allowing for the

pushing of subprime loans and mortgages; a subsequent

increase in banks’ leverage; credit agencies’ failure to

appropriately rate the risk of securitised investment prod-

ucts involving subprime mortgages; a failure to predict the

end of the housing bubble; and the banks’ short-term bonus

culture.

The critically acclaimed and award winning film Margin

Call—written and directed by J. C. Chandor and released

in late 2011 (www.imdb.com/title/tt1615147/)—paints a

fascinating complementary portrait of the financial crisis.

The film zooms in on the inner workings of a fictional

investment bank at the dawn of the financial crisis that had

much to lose from the impending crash of the hitherto very

profitable mortgage-backed securities (MBS) market. Fol-

lowing a young risk analyst’s discovery that the bank is

heading for substantial losses, the film traces the decisions

made by the banks’ managers that culminate in the ‘call’ to

sell off the bank’s toxic assets before everyone else does.

The film’s focus on motivations, behaviours and rational-

isations in a situation that calls for a decision that will have

highly destructive consequences for a wide range of

stakeholders makes it a powerful teaching tool for business

ethics teaching. The aim of this article is to draw out

important themes of the film that can be utilised for

teaching in general business ethics as well as in financial

ethics classes.

A. Werner (&) Middlesex University Business School, The Burroughs,

London NW4 4BT, UK

e-mail: [email protected]

123

J Bus Ethics (2014) 122:643–654

DOI 10.1007/s10551-013-1781-4

Margin Call follows a series of feature films released in

the past few decades that offer dramatised treatment of

business ethics-related topics including sexual harassment

(Disclosure [released in 1994], Nine to Five [1980]), dis-

crimination (Philadelphia [1993]), whistle-blowing (The

Insider [1999]), lobbying (Thank you for Smoking [2005])

and human rights abuses by corporations in third world

countries (e.g. The Constant Gardener [2005]).

Margin Call can be regarded as a successor to those

films that have depicted the life-worlds of salesmen (e.g.

Glengarry Glenn Ross [1992], Death of a Salesman [1985])

and financiers (e.g. Wall Street [1987], Other People’s

Money [1991]). In fact, observers (http://www.imdb.com/

title/tt1615147/reviews) have described Margin Call as an

amalgamation of Glengarry Glenn Ross, which uses an

ensemble cast to depict the morally ambiguous and soul-

destroying experience of real-estate salespeople selling

bogus land deals, and Wall Street, which, starring Michael

Douglas as ruthless investor Gordon Gekko, introduces the

audience to the aggressive, and often illegal, tactics in the

world of high finance in the 1980s. Margin Call takes place

in a similar yet updated context as Wall Street—the 2000s

financial crisis—but by using an ensemble cast as in

Glengarry Glenn Ross rather than focusing on only one or

two central figures, the film draws out the range of tensions

that a bank’s employees and managers at different levels of

its organisational hierarchy experience (see Hassard and

Buchanan 2009).

Full-length films—both feature and documentary—have

increasingly been recognised as an effective teaching tool

in management education. They help bring to life man-

agement topics, and abstract ideas, concepts and theories

related to the workings of organisations (Huczynski and

Buchanan 2004; Hassard and Buchanan 2009; Berger and

Pratt 1998). Feature films in particular offer a more dra-

matic, engaging, motivating and memorable experience

than conventional classroom methods (Hassard and

Buchanan 2009; Hassard and Holliday 1998), not least

because of their ability to depict emotional aspects of

experience (Hassard and Buchanan 2009). They provide a

window into worlds that are normally inaccessible to stu-

dents as well as offer opportunities for ‘naturalistic gen-

eralisation’, that is, discussion on how the film could be

relevant to their own life-worlds (ibid).

It is important, however, to be aware that film narratives

are highly selective (Hassard and Buchanan 2009) and are

their creators’ (subjective) accounts of reality (Huczynski

and Buchanan 2004). This may leave the film open to

criticism of depicting an unrealistic, exaggerated or sen-

sationalised view of the world, and may leave audiences

vulnerable to manipulation (Hassard and Buchanan 2009).

Brewis (1998), for example, argues that the depiction of

sexual harassment in Disclosure (with a highly eroticised

woman cast as the harasser) could be seen to ‘generate

understandings that attribute at least some blame to the

recipient of harassment’. Denzin (1991), similarly, criti-

cises Wall Street for failing to interrogate the inner market

structures that produce unethical commodity trading, which

leaves the ethical contradictions that lie at the heart of

(deregulated) market capitalism unexamined and thus

reduces the film’s narrative to a simplistic morality tale. 1

Margin Call tells a gripping story and features a cast of

well-known film stars, which should motivate students to

engage with the film’s topics, especially because the story

is mainly told from the perspective of younger bankers.

The film may be criticised, however, for the fact that it

simplifies events by cramming them into a much shorter

time space than would have been the case in real life (for a

more accurate account of how events may have unfolded

for an investment bank in the financial crisis a television

serial might have been more appropriate). Also, the plau-

sibility of the narrative may be somewhat called into

question by making a young, lower level member of staff

the person who triggers off events. Finally, being primarily

a film that focuses on people and their interactions with

each other, Margin Call does not explain the broader

context of the financial crisis and only gives brief glimpses

into how banks were implicated in the crisis through the

development and trade of securitised investment products

and their active pushing of subprime mortgages.

Critics and reviewers have found, however, that the film

presents an authentic depiction of behaviours within

investment banks (http://www.imdb.com/title/tt1615147/

reviews), which was aided by the fact that the film wri-

ter–director’s father used to be an executive at Merrill

Lynch (Turan 2011). The film thus provides valuable

material from which lessons about human decision-making

and behaviours within corporate contexts can be drawn.

Margin Call also overcomes the limitations of Wall Street

that Denzin (1991) pointed out (see above). Unlike Wall

Street, the film does not simply focus on characters that

some might call ‘ruthless’, ‘greedy’ or ‘bad apples’, rather,

it provides insights into the complexity of human motiva-

tions and how they might be influenced by organisational

priorities, structures and culture. The film also critically

examines the links between the behaviour and practices of

investment banks and wider societal values and priorities,

thus telling a more complex story than Wall Street.

This article contributes to the growing number of

scholarly articles on teaching (business) ethics with films.

1 A slightly different view regarding the film’s merits is provided by

MacDonald (2010b) and Shaw (2012), who argue that Gordon

Gekko’s ‘greed is good’ speech at an AGM is a useful focus for

discussions around effective corporate governance (MacDonald

2010b) and the shareholder versus the stakeholder view of the

corporation (Shaw 2012).

644 A. Werner

123

One set of these articles report on empirical research,

carried out to determine the instructional value of specific

films among their students (e.g. Berger and Pratt 1998) or

the change in students’ moral attitudes after exposure to a

film on a business ethics theme (e.g. Cox et al. 2009). In

another set of articles, authors set out specific suggestions

for how to use a film for teaching, by outlining lesson plans

(e.g. van Es 2003) or topics and questions for classroom

discussions (e.g. Chan et al. 1995; Shaw 2004; Champoux

2006; Biktimirov and Cyr 2012). Most of these articles are

underpinned by the application of ethical theory.

This article contributes to the second set of articles, as it

sets out a range of topics that students may explore with the

help of the film in teaching sessions. But in contrast to the

articles mentioned above, this article draws mainly on

descriptive business ethics and management literature,

which has explored how contextual factors influence

behaviour and rationalisations of organisational members

and interact with their motivations (e.g. Jackall 1988; Vre-

denburgh and Brender 1998; James 2000; Anand et al. 2004;

Heath 2008; Roberts 2001a, b), in addition to drawing on

some normative concepts (e.g. social contract theory, pro-

fessionalism) and ideas. In particular, the article will explore:

the role of money both as an incentive and as a general

motivation for people’s behaviours and actions; the impact

of power structures in organisations on their employees;

contextual factors that distance people from the conse-

quences of their actions including the rationalisations that

people employ to justify their morally ambiguous decisions;

as well as considerations of how the banking industry may be

‘transformed’. The aims will be to develop students’ critical

awareness of these topics and issues, and to stimulate ‘moral

imagination’ (Cox et al. 2009), which includes to imagine

solutions that change the ‘rule of the game’ (Werhane 1999).

The ultimate aim is that students will develop reflective skills

with regards to their own (current and future) organisational

context and their own priorities.

The article is structured as follows. Following a brief note

on how to use the film in a classroom setting, a brief synopsis

and a description of the main characters are provided. The

following sections will set out each of above-mentioned top-

ics. Each section will include a list of scenes in the film rele-

vant to the topic, reference to relevant conceptual and

theoretical literature, and a set of discussion questions or brief

discussion outlines. A conclusion section will summarise the

possibilities that the film offers for business ethics teaching.

Using Margin Call for Teaching

The film may be used across a range of business ethics

classes, from general classes focusing on descriptive busi-

ness ethics, that is, the exploration of influences on

individual and corporate decision-making and behaviour in

(profit-seeking) organisations (Crane and Matten 2010) to

classes teaching ethics in finance. Tutors may choose which

of the topics set out in this article fit with their respective

curricula. Even though the article presents the topics in a

particular sequence, this should by no means imply that

tutors have to follow this sequence as well. Rather, tutors

might want to mix and match the topics according to what

content they want to cover in their classes.

The film is suitable teaching material at both under-

graduate and postgraduate level, but it might work partic-

ularly well with MBA students who bring their experience

of their own workplace to the teaching sessions.

It is recommended that the students watch the whole

film in class, followed up by discussion. Due to its length

(1 h 48 min), this may only be feasible within longer

teaching sessions, for example, in block teaching. Alter-

natively, students may be asked to watch the film in their

own time and reflect on the film’s content in subsequent

teaching sessions, in which bite-sized clips from the film

(as set out in the topic sections) could be shown. 2

Sequences from different parts of the film often belong to

one topic; therefore, to aid the presentation of bite-sized

clips, each of the following sections contains information

on where the relevant film segments can be found.

The attention of the students should be on the behav-

iours and decision-making of the main characters and they

should not get too distracted by the technical details of how

MBS investment products worked. In order for them to

understand what is at stake in the film and to understand the

concepts of MBS backed securities and leverage, students

might be asked to watch the Crisis of Credit (http://

crisisofcredit.com/) video clip (Jarvis 2012) in preparation

for teaching sessions, which should provide them with the

necessary background information. Students may also be

recommended to read Paul Mason’s book Meltdown (2009)

or watch the film Inside Job (Biktimirov and Cyr 2012) if

they want to gain more in-depth understanding of the

mechanics of the financial crisis.

Synopsis and Main Characters

The story of the film is set in 2007 at the dawn of the

financial crisis and focuses on an un-named investment

bank (even though observers have pointed out that the

events depicted in the film are loosely based on what was

2 A script of the film (http://www.ropeofsilicon.com/Images/web/

template/awards/2012/scripts/margincall.pdf (Chandor 2010)) is

available on the internet. Even though in the actual film parts of the

dialogue are worded slightly differently and some of the scenes have

been deleted or are shown in a slightly different order, the script may

be helpful for students to study the film more in-depth.

‘Margin Call’ 645

123

happening at Lehman Brothers and Goldman Sachs at the

time). The tightly scripted narrative unfolds over a period

of about 24 h, with most of the drama taking place during

the night. The film opens with a scene in which the Head of

Risk Management is being fired as part of a corporate

downsizing exercise. On leaving the building, he hands a

USB stick to Peter Sullivan, a young senior risk analyst,

asking him to take a look at a new risk model that he had

begun to work on. Peter discovers that because of the

changed risk environment, the equations on which

the bank’s MBS trading rest no longer work. Because of

the high leverage it has on its MBS assets, the bank is set to

lose more money than the current market capitalisation of

the firm if the assets were to decline as projected in the new

model. Peter reports his findings at once to his immediate

superiors, who, in turn, escalate this concern further up the

hierarchy. As the ‘news’ reach top-management, a decision

is made in a nightly emergency board meeting to sell off

these risky assets the following morning in a fire sale to

minimise losses, fully aware that this will cause ‘turmoil in

the markets’ and is likely to destroy the trust relationships

the company enjoys with its trading partners.

The film’s story comes alive through its main characters

and their interactions with each other, which reveal their

different motivations and concerns and prompt them to

make short ‘philosophical’ speeches related to the events

that are happening in front of their eyes. The main char-

acters are set out in Table 1.

The Impact of Money on People’s Attitudes

and Behaviours

A number of observers have commented on how banks’

practices of paying themselves and their staff huge bonuses

for deals that carried high risk, without factoring in the

possibility of large losses from those transactions, con-

tributed to the financial crisis (e.g. Stiglitz 2010, pp. 152,

279; Donaldson 2012). The film does not specifically

examine this particular problem, but money, and how it can

control and motivate people’s behaviour, is a pertinent

theme throughout the film, and may therefore be a suitable

starting point for discussion. The film focuses on both,

money as an incentive to engage employees, or make them

complicit, in morally ambiguous actions, and as a broader

motivation for human behaviour.

Much has been written about rewards and incentives in

organisations and how firms might use them effectively to

induce certain behaviours among their members (e.g.

James 2000; Carson 2003; Anand et al. 2004; Johnson et al.

2011), as monetary or other rewards help employees ‘to

resolve the ambiguity that often pervades business issues in

a manner that suits their self-interest’ (Anand et al. 2004).

Several scenes in the film illustrate how this works (whilst

they also hint at the CEO’s dependence on people

accepting these incentives for the firm’s plan to succeed).

One set of scenes focuses on the traders: the scene in which

Sam Rogers explains to the board how the traders need to

be thrown a ‘pretty big bone’ in order to go along with the

fire sale, especially as they are likely to lose their jobs

afterwards (49:40–51:45), and the scene in which he

explains to his traders how many million dollars in bonus

they will be paid if they complete the fire sale

(01:22:00–01:24:35). Another set of scenes focus on Sam

himself and his journey from a man of conscience, who

objects to the fire sale because it will kill the market

(32:50–33:30, 50:10–55:05), to his (reluctant) acceptance

of a large bonus in return for his assurance that he will

motivate the traders to sell as much of the toxic assets as

they can (01:10:22–01:12:40). The film also shows how the

firm uses money as a ‘negative’ incentive, that is, as a

threat to withhold from employees what is due to them if

they refuse to be compliant (James 2000). Eric Dale is a

case in point, as he is being threatened with the loss of his

severance package if he refuses to stay silent over the

firm’s actions, something he might find particularly diffi-

cult to accept because he is the breadwinner of his family

and owns a heavily mortgaged house in an expensive

neighbourhood (01:05:20–01:07:10, 01:09:00–01:10:20,

01:19:50–01:22:00).

Tutors may wish to discuss the following questions in

relation to above film scenes:

– Given that the firm’s senior managers believe that the

fire sale is ‘the right thing to do’, why does the firm

have to rely on incentivising (or threatening) their staff

to sell off their MBS assets? Is there a sense that a line

is being crossed here?

– To what extent would it have been feasible for the

traders to say ‘no’ to the fire sale and their bonus?

– What do you think about the size of the traders’

bonuses? Are they justified (a) in view of the cost that

their actions bring on themselves, (b) in view of the

enormous economic and societal cost of the ensuing

financial crisis?

– Looking at how Sam changes his position by accepting

his bonus, would you regard Sam a more or a less moral

person than the rest of the traders and the other

managers, and why?

– How sympathetic, and why, are you with Eric’s

decision to agree to staying silent? Does this take

away from his courageous stance he showed when

alerting senior management to the risks of their trading

model?

– Have you observed in your own workplace instances

where people were incentivised to engage in practices

646 A. Werner

123

which they otherwise would not have? What did you

think about these situations?

The film also looks at money as a motivation for people to

work in the financial industry. Seth’s obsession with how

much he and other people in the bank earn (23:15–24:15,

26:55–28:55, 57:10–58:10) and Will’s account of how he

spent the 2.5 million dollars that he earned the previous

year—which included $150,000 for a car and $76,000 on

hookers, booze and dancers (38:55–40:03)—are particular

pertinent scenes, but Peter’s admission that he left a career

in engineering because of the money that the bank offers

(31:25–32:15), and the financial situation of Sam, who is

divorced and spends thousands on his beloved dog who is

dying (11:30–11:55, 16:50–17:10, 1:34:45–1:38:20), and

of Eric, who has just bought a house for his family in an

expensive neighbourhood (1:05:20–01:06:00), also deserve

attention.

The high level of remuneration in the banking sector

may be a rather delicate subject to discuss with business

students (especially with MBA students, a number of

whom may study for their degree because it is a ticket to

future high income levels). A way into this discussion may,

however, be found by looking at psychological studies that

have investigated the link between money and happiness

and have found that there is only a limited relationship

between the two variables (e.g. Aknin et al. 2009) whilst

also looking at studies that have found that high income

might have different functions, such as being a ‘social tool’

to enhance one’s status, rather than bringing about happi-

ness (Ahuvia 2008). Studies that have found that people’s

happiness depend on how they spend their money (see

Dunn et al. 2011), for example, when they use money to

benefit others, may also enhance discussion.

Questions for discussion may include:

– Looking at the main characters in the film, how would

you answer the question ‘Does money bring

happiness’?

– What motivations other than happiness may people in

the film have for seeking to work in a high-paying

industry? To what extent can these be considered valid?

– Looking at Will’s account of how he spent his money;

does it matter what people spend their money on? Do you

believe that there are more ‘satisfying’ and ‘worthwhile’

uses of money than others? Why, why not?

Table 1 Main characters

Risk analysts

Peter Sullivan (played by

Zachary Quinto)

A 28-year-old senior risk analyst who holds a Ph.D. in Astrophysics from MIT. He is the person who

‘discovers’ the risk to which the company is exposed in relation to their MBS assets, but appears to be a

more neutral, detached character throughout the film

Seth Bregman (Penn Badgley) A 23-year-old junior risk analyst. He just happens to ‘be there’ when Peter shares his discovery with his

bosses. Even though Seth is more of a by-stander, his comments on the events that are unfolding in front of

the bank’s staff are very instructive

Eric Dale (Stanley Tucci) The former Head of Risk Management, who gets fired by the bank as part of a downsizing exercise. He had

started developing the risk model that Peter later completes. At a later point in the film, we learn that he

had been raising concerns in relation to the company’s MBS trading model previously, but his concerns

appear not to have been taken seriously by his superiors

Traders

Will Emerson (Paul Bettany) Head of Trading Desk. On discovering the massive risk the company is exposed to, Peter Sullivan first turns

to Will Emerson, who escalates Peter’s findings further up the hierarchy. Throughout the film, Will makes

cynical observations about himself, the bank and society at large

Sam Rogers (Kevin Spacey) Head of Trading Floor. Sam has been with the firm for more than 30 years. He appears to believe in

professional standards such as maintaining long-term and mutually beneficial relationships with clients and

trading partners, even though after some persuasion he, reluctantly, agrees to go along with the fire sale

Senior Executives

Sarah Robertson (Demi Moore) The firm’s Chief Risk Management Officer. Sarah is forced to confirm Peter’s findings when they are

reported to her. We learn that, even though she had passed on Eric Dale’s previous concerns about the

company’s risk exposure to top-management, she did not insist on following up on those concerns.

Following the board’s decision to sell off the bank’s risky assets, the CEO decides to put the blame for the

company’s crisis on her and to let her head roll

Jared Cohen (Simon Baker) He holds the post of Head of Investment Division at the youthful age of 43. He takes the decision to call in

the CEO to discuss the possibility of a fire sale. He also makes sure that he will not have to take any blame

for the crisis

John Tuld (Jeremy Irons) The CEO and chairman of the board; a towering and enigmatic figure who is keen to ensure the survival of

the bank. He very eloquently and forcefully persuades the board and senior traders to authorise and support

the fire sale, providing a number of rationalisations to others (and to himself) as to why this is the right

thing to do

‘Margin Call’ 647

123

– In the scene in which Seth tells Peter how much Will

earned the previous year, Peter responds: ‘Does this

seem right to you?’ Why does Peter question the

legitimacy of Will’s—and implicitly the other bank-

ers’—income levels? Should there be an upper limit to

what people are able to earn? Why, why not?

The last question ties into the discussion how the banking

sector may be ‘transformed’, which is the focus of another

section below.

Power Structures

Even though the company’s CEO likes to portray his firm

as a ‘powerless’ player in the market, as we will see later

on, numerous scenes in the film show that the firm is able

to exert considerable power, especially over their

employees. We have seen above how the firm does this

through the use of incentives, but other scenes focus more

directly on power structures in the organisation (Johnson

et al. 2011, pp. 177–178), in particular those that show how

the firm has been handling the inconvenient news that there

might be something wrong with their MBS trading model.

An interesting figure here is Sarah Robertson, the Chief

Risk Management Officer. A number of scenes that show

exchanges between Sarah Robertson and Sam Rogers

(33:50–34:45), Jared Cohen (40:40–42:25, 55:40–57:10),

Eric Dale (01:19:50–01:22:00) and John Tuld

(59:22–1:01:35) hint at the fact that she and others had

already been aware of the problems associated with the

bank’s MBS trading before Peter’s discovery, yet chose not

to solve them, although Sarah insists to Eric that she did

pass on the concerns he had raised. Even though the

exchanges between her and Jared and her and Eric imply

that she is no more or less to blame for the crisis than the

other senior managers, she becomes the only victim in the

senior management ranks, with John Tuld announcing to

her that she will be made the ‘scapegoat’ for the crisis and

will lose her job. At the same time, Sarah is believed to

have exerted her power to get Eric Dale fired from his job

(06:53–07:47 and 10:03–10:50) as he may have become

too inconvenient for her and the firm.

The ‘Glass Cliff’ Thesis

What happens to Sarah may be typical of women in lead-

ership positions and their encounter with what has been

termed the ‘glass cliff’ (Ryan and Haslam 2007; a brief

introduction to the concept can be found here: http://

news.bbc.co.uk/1/hi/magazine/3755031.stm (Ryan and

Haslam 2004)). The ‘glass cliff’ thesis holds that women

who break through the glass ceiling into the upper echelons

of management tend to be placed in more precarious lead-

ership positions than men. As a result, they are more exposed

to criticism than men and are more likely to be held

responsible for negative outcomes, even if they were not set

in train by them. The film does not tell us how Sarah was

appointed to her position (i.e. whether it was clear from the

beginning that her role was a precarious one), but we can

clearly see that she found herself in a much more precarious

position than her male colleagues who, like her, should have

worked towards avoiding the crisis. Studies exploring the

glass cliff also found that women—especially those working

in financial services—have less authority than men (Ryan

and Haslam 2007), and we may assume that this was a reason

Sarah was unable to, or did not choose to, continue to press

the concerns that Eric Dale had relayed to her.

Questions for discussion may include:

– To what extent would you blame Sarah for failing to

prevent the crisis?

– To what extent may her gender have impacted on John

Tuld’s decision to fire her?

– How is it possible, if at all, for women in leadership

positions to assert their place, in a ‘masculine’, ‘tough’

environment of an investment bank such as portrayed

in the film?

Suppression of Concerns and Critical Voices

Another, interacting, avenue for exploring the organisa-

tion’s power structures is looking at the role of the risk

managers in the firm. Throughout the film, risk analysis

and management is portrayed as an obscure and highly

technical activity, but also as an activity that if the CEO

and the board had paid sufficient attention to the work of

some of their risk analysts and managers (especially Eric),

it may have prevented this crisis situation for the bank. The

film does not say that the company had insufficient risk

management tools, but shows that the bank lacked mech-

anisms for the risk managers to raise their concerns in a

way that senior management would not have been able to

suppress them. The ways Eric’s concerns were stifled echo

the ‘real-life’ fate of the Head of Risk of HBOS who was

fired after he tried to raise concerns with top-management

with regards to their risky business models (Croft 2009).

Sarah the Chief Risk Management Officer, on the other

hand, reported to the CEO and not to the board (see Aebi

et al. 2012), and thus found herself too exposed to this

powerful man. Their stories may give rise to discussions on

how employees more generally could be ‘empowered’

(within a risk governance framework) to be able to speak

up about their concerns with regards to their company’s

practices and conduct.

648 A. Werner

123

Social Distancing

Whilst above explorations into incentives and power

structures already give an insight how corporate contexts

can impact on people’s attitudes and behaviours, the film

also provides examples of how corporate bureaucratic

contexts, priorities and cultures may distance people from

the consequences of their actions, and make them discon-

nected from their broader communities and focused on

their own survival only (e.g. Jackall 1988; Ten Bos 1997;

Heath 2008; Roberts 2001a, b). The following sections will

highlight the organisation’s impersonal, instrumental cul-

ture, the language used by those working in the organisa-

tion that ‘neutralises’ their actions, and the detachment of

the employees from wider society.

An Impersonal, Instrumental Culture

Of particular importance is the opening scene, in which a

large number of people in the organisation are being laid

off (1:09–6:50), which is being repeated at the end of the

film (1:29:05–1:30:15). The people in the organisation are

fired by employees of a specialist company, not by the

bank’s managers themselves, and they are asked to leave

the building immediately whilst their company phones and

email accounts are being cut off with immediate effect

(something that backfires badly in relation to Eric Dale).

Those staying behind are not to show any emotions of

regret or any sense of loss. Rather, this exercise is meant to

sharpen their instincts for their individual survival and

success—as Sam Rogers impresses on them in a short

speech after those fired have left the building

(12:05–13:40). This scene shows an example of the ‘indi-

vidualising’ effect of corporations’ ‘disciplinary pro-

cesses’, designed to make employees’ actions aligned with

the company’s (short-term) profit goals and to make them

stop caring about issues that go beyond their own self-

interested contribution to these goals (Roberts 2001a, b).

That people working in this organisation are only of

‘instrumental’ value to the firm is also shown by the fact

that Sam Rogers does not even know the names of the risk

analysts (Peter and Seth) who work in his trading division

before Peter brings his findings to Will’s and Sam’s

attention (24:40–25:12, 30:15–30:40).

There are only very few scenes in the film that show true

human warmth, and an important one is the brief exchange

between Eric and Peter as the former is being escorted out

of the building (08:30–10:00). Peter thanks Eric for looking

after him when he started out in the firm, which prompts

Eric to hand over the USB stick with the fateful data to

Peter, which in turn prompts Peter to complete the risk

model and share his findings with his superiors. This scene

illustrates how ‘individualising’ effects in corporations can

be overcome by genuine, non-instrumental human

encounters, as these are able to trigger a sense of obligation

and concern (Roberts 2001b).

Questions for discussing these scenes may include:

How would the ‘impersonal’, instrumental culture of the

firm have affected those working in it?

What impact would working in such an organisation

have on you?

Have you had any encounters with work colleagues that

have challenged you in the way that Eric challenged

Peter?

Where are possible spaces in organisations for informal,

non-instrumental encounters that may challenge the

‘status quo’?

Using Language to Neutralise Actions

The language employed by the characters in the film, and

designed to distance themselves from the moral content of

their actions, deserves special attention. The film shows

excellent examples of how people use language to rationalise

and justify their behaviours, by employing so called Tech-

niques of Neutralisation (Heath 2008; Anand et al. 2004). This

theory originates in criminological literature and is a cognitive

approach exploring how people rationalise or ‘excuse’ their

behaviours to themselves and to others, even though these

arguments only work within a narrow logic and can be faulted.

(A quick introduction to the theory can be found here: http://

businessethicsblog.com/2010/11/16/mba-ethics-education-

avoiding-excuses/ (MacDonald 2010a) or here http://en.

wikipedia.org/wiki/Techniques_of_neutralization). Because

of its attention to the linguistic techniques that individuals

employ in personal interactions to justify or legitimise their

behaviours that are illegal, or may be deemed unethical,

techniques of neutralisation theory has more of a ‘micro’-

level focus, although, as we shall see below, in business

environments these rationalisations often relate to the dis-

cursive context of the ‘market’ and its competitive structures

(Heath 2008). This ‘bottom-up’ approach contrasts some-

what with investigations into how ‘grand’, macro-level dis-

courses may be deployed to legitimise or justify policies and

societal practices that may be deemed unethical or unjust.

Examples of these kinds of studies include explorations into

how ideologies stemming from economic (e.g. ‘trickle-

down’ economics) or political–philosophical thought (e.g.

meritocracy) are deployed to legitimise state policies that

sustain societal inequalities, or to legitimise opposition to

policies (e.g. wealth redistribution, affirmative action) that

seek to change the societal status quo (e.g. Wisman and

Smith 2011; Sibley and Duckitt 2010).

‘Margin Call’ 649

123

The literature (e.g. Heath 2008; Anand et al. 2004)

identifies several techniques of neutralisation that people

may employ and in the film we encounter a range of these

as well. 3

Key scenes are the two nightly meetings in which

the possibility of a fire sale is being decided (30:15–35:10,

43:20–52:44), John Tuld’s interactions with Sam Rogers

(53:00–55:00, 1:31:40–1:34:30), and Will Emerson’s

monologue about why bankers have the right to engage in

such actions (1:13:42–1:14:55).

The nightly discussions of the fire sale are accompanied

by a strong fear of impending losses that will crush the

bank, which is likely to be a strong motive for their actions

(see Heath 2008). This leads some of the characters (John

Tuld, Jared Cohen, Ramesh Shah) to employ a variant of

the rationalisation ‘Everybody is doing it.’: They argue that

if they are not the first ones to sell off their toxic assets,

their competitors will soon do the same and they will lose

out. This leaves them ‘no choice’ (denial of responsibility)

but to act on this information as quickly as possible. The

following exchange between Sam Rogers and John Tuld is

also instructive:

Sam Rogers: And you are selling something you

know has no value?

John Tuld: We are selling to willing buyers at the

current fair market price; so that we may survive.

One neutralisation technique that John Tuld uses here is

denial of injury, that is, that they will not really harm

anybody, as the assets are sold to ‘willing’ buyers, who are

expected to check what they are buying (‘buyer beware

principle’). Another rationalisation underlying these argu-

ments is denial of victim, which means that the bank’s

managers are expecting that other banks would try to do the

same to them, if they possessed the same information.

John Tuld employs a further neutralisation technique:

appeal to higher loyalty (‘that we may survive’). That is, he

refers to the bank’s moral obligation to ensure its survival

in the market as a higher, legitimate goal that overrides any

other concerns. John Tuld’s speech to Sam Rogers in which

he explains that they really just ‘react’ to whatever is

happening in the market and that they cannot control

anything, sums up his rationalisation (or true belief?) that

the blame for the fire sale lies with the market in which the

firm is merely a ‘powerless’ participant seeking to survive

and not with the firm itself (denial of responsibility).

A final rationalisation justifying the fire sale is offered

by Will Emerson, who uses a claim to entitlement argu-

ment: It was people’s demand for high material living

standards, which they could not have enjoyed without the

banks’ financial innovations, that are really to blame for the

situation; therefore no one should be surprised at the bank’s

actions as they are trying to cut their losses from those

risky innovations.

In the classroom, tutors may wish to explore with their

students the various techniques of neutralisation that the

characters employ with the students and what legitimacy

and force they have. Students might find that in a ‘high-

loss’ situation these arguments have some credibility, but

discussion could also bring out how these rationalisations

may be challenged. This discussion could touch on the

systemic consequences of the fire sale for the financial

industry, which would also affect the bank itself (see Sti-

glitz 2010, p. 150); the legitimacy of exploiting informa-

tion asymmetries (especially if the traders are urged to sell

to their mothers if they can) (ibid); the contrast of John

Tuld’s claim regarding the ‘powerlessness’ of the firm in

the market to the depictions of corporate power in the film

(from artefacts such as the helicopters and the firm’s offices

and restaurant overlooking Manhattan’s skyline to Tuld’s

assertion that he will now actively seek to exploit the new

market situation created by the financial crisis); and the

legitimacy of Will Emerson’s claim to entitlement (to what

extent is society really to blame for this situation). Students

may also be asked what rationalisations they have come

across in their own workplace and how it might have been

possible to challenge these rationalisations.

Apart from the use of neutralisation techniques, the film

allows for exploration of a further aspect of language: the

use of euphemistic language that will abet people’s ra-

tionalising, and distancing from the consequences of, their

actions (see Anand et al. 2004). For example, in the trading

scenes towards the end of the film Will Emerson makes his

trading counterparts (and himself) believe that all that the

bank does is a ‘spring clean’, a euphemism that for a while

successfully disguises the real nature of their sale

(1:26:50–1:28:35). The ‘music’ analogy employed by John

Tuld (47:25–49:20), which disguises the fact that the

banks’ activities have a profound effect on the ‘real

economy’ and, ultimately, people’s lives, is another

example. By drawing students’ attention to this power of

language, they may also be asked what other words people

3 The following techniques of neutralisations are used by the

characters in the film (adapted from Heath 2008):

– Denial of responsibility—the perpetrator thinks that what hap-

pened was outside their control, that they had no choice and so on

– Denial of injury—the perpetrator denies that any harm was done

by their actions

– Denial of the victim—the perpetrator considers those harmed by

their actions to be unworthy of concern

– Appeal to higher loyalty—the perpetrator claims that their act was

done out of a sense of moral obligation

– Everyone else is doing it—the perpetrator assumes that it is

unreasonable to expect legal/ethical behaviour because others are

engaging in this practice, too

– Claim to entitlement—referring to a moral obligation or a

misdeed perpetrated by the victim that entitles the perpetrator to

act in a particular way

650 A. Werner

123

may use in corporate contexts to disguise moral aspects of

their actions. Finally, the frequent use of swear words and

pejorative words, employed by nearly all of the main

characters, may also merit some reflection, and students

may discuss how this language may affect the moral sen-

sibilities of those working in the organisation.

Detachment from Society

Heath (2008) argues that a feature of the corporation is that

it ‘constitutes a subculture that in many cases isolates

individuals from the broader community, and thus may

serve to insulate [their] arguments [such as those made in

the section above] from critical scrutiny.’ People working

in the financial industry may be particularly prone to

developing a subculture, and this is shown in the film by

the way the traders spend their time socialising with each

other in nightclubs after work (18:10–19:20, 26:55–27:54).

It is reasonable to assume that this ‘work hard – play hard’

lifestyle (which the film Inside Job also comments on)

would have prevented them from coming into frequent

contact with people who might have challenged their

rationalisations or with those affected the most by the

impending fire sale.

The employees’ detachment from wider society is also

shown by the constant presence of computer screens dis-

playing a dazzling array of numbers and charts, which had

transformed real life mortgages into sets of statistical data

and tradeable securities. These screens powerfully visualise

the nature of securitisation (the basis of the bank’s profit-

able trading activities): the severance of the traditional trust

relationships between borrowers and lenders that used to

underpin mortgage loans (Stiglitz 2010, p. 290), which

made those involved in this ‘securitisation chain’ (Bik-

timirov and Cyr 2012), including the bankers, blind to the

risks and irresponsibility involved in signing people up for

mortgages who could not really afford them and to the risks

and potential losses for those who would be the final

holders of those investment products.

The former observation might lead to a debate among

students as to the importance of being challenged in one’s

ideas, and to what extent their own socialising activities

may bring them into contact with people who challenge

their ideas and decisions. The latter observation feeds into

what will be discussed in the next section.

The Purpose of Banking: How Can Bankers Become

‘Bridge Builders’

Beyond analysis of how a particular corporate context (or

any corporate context that faces a potential high-loss situ-

ation) may induce people working within them to make, or

be complicit in, decisions that will harm others, the film’s

narrative also offers opportunities to think more deeply

about the purpose of the banking industry (and to some

extent, about the purpose of any industry), and how it could

be transformed.

As pointed out above, the film does not explicitly

explain to its viewers that it was the marrying of conven-

tional retail banking activities (i.e. mortgage lending for

residential homes) with derivative-based speculative

financial activity—made possible by deregulation—which

exposed economy and society to the high risks that in the

past only the small numbers of wealthy speculative

investors would have been familiar with. It only provides

some tentative insights into what practices banks engaged

in: trading in complex products that the bankers hardly

understood themselves (24:50–26:55, 44:15–44:55), and a

relentless search for profitable opportunities in the market,

no matter what, as the scene in which John Tuld invokes

the famous ‘music’ analogy 4

(47:25–49:20) and the scene

in which he explains his intention to make sure that he will

make money out of the financial crisis (01:34:00–01:34:40)

indicate.

Some scenes, however, are particularly useful starting

points for a discussion of the purpose of banking. One of

the key scenes in the film is the one in which Eric Dale tells

Will Emerson about his former career as an engineer, when

he was involved in a bridge building project that saved the

inhabitants of two communities 35 miles of extra driving,

which, so Eric calculates, amounts to over 1,500 years not

wasted in a car (1:07:10–01:08:55). Contrast this with the

scene in which Seth reflects that what the bank is doing

does not amount to much more than glorified gambling and

that it is only about one guy winning and one guy losing

(23:15–24:15), which is also echoed in John Tuld

explaining to Sam that what they do will always produce

winners and losers (1:31:40–1:33:45).

Eric describes his past job as an activity with obvious

socially useful outcomes, which would have benefited a

range of stakeholders, especially the two communities, but

also, presumably, himself (not least giving him the satis-

faction of a job well done) and the other employees and the

company they worked for. Seth and John Tuld, on the other

hand, describe the ‘winners and losers’ logic of speculative

finance which makes those who engage in it either rich or

poor, but, as we saw in the financial crisis, only leads to a

redistribution of wealth (Stiglitz 2010, p. 268) and not to

outcomes that would make everybody (homeowners,

4 In July 2007, Chuck Prince, the then Citigroup Chief Executive,

famously said ‘As long as the music is playing, you’ve got to get up

and dance’, referring to the continuing availability of cheap credit that

enabled his bank to pursue profitable opportunities in the leveraged

finance market (Nakamoto and Wighton 2007).

‘Margin Call’ 651

123

investors and even the bank’s shareholders) better off in the

long term. 5

Classroom discussion could move from drawing out the

differences between Eric’s and Seth’s/John’s accounts to a

debate of what would need to happen to make bankers into

‘bridge builders’, and ‘bridge builders’ could be used as a

metaphor for the building of a safe, stable and productive

industry. 6

This discussion may be framed by the idea of

‘social contract’ (e.g. Donaldson 2000), that is, by con-

siderations of how the activities of particular trades and

industries contribute to a ‘broader good’ which is

(implicitly) sanctioned by wider society. 7

Commentators on the financial industry (e.g. Stiglitz

2010; Augar 2009) argue that this transformation could be

achieved by a (modified) return to old-style, ‘boring’

banking. 8

Classroom discussion could therefore start by

considering the traditional core (economic) functions of the

financial sector: the efficient allocation of capital by taking

deposits and channelling them into loans that fund ‘pro-

ductive’ ventures (intermediary function) such as the start

up of new businesses, the expansion of existing ones,

which in turn generates more jobs; or, for households, the

purchase of a home; alongside the provision of a low-cost,

efficient payments system (payments system function) (see

Stiglitz 2010, pp. 5, 109). The provision of loans, in turn,

entails careful assessment and management of risk to

ensure that the depositors’ money is safe and can be

returned with interest (ibid., p. 5). This would preclude

excessive securitisation, which led to reckless, risky lend-

ing (ibid., p. 14). In other words, loans are to be held by the

originator (originate and hold) and not sold on for securi-

tisation (originate and distribute), which also points to a

move from short-term deals and arms-length relationships

to a more direct and long-term relationship between lender

and borrower.

This risk management function may be considered fur-

ther in relation to collective forecasting and financial

innovation. With regards to the former it means that cal-

culation of risks (for the banks and their stakeholders)

should not rely on mathematical models only, but on (tacit)

knowledge of relevant knowledge holders, to help develop

(worst-case) scenarios and analyse their likely impact (see

Wilson 2013). For example, it has been argued that

mathematical models generally do not predict low-proba-

bility extreme events, but that ‘human reason’ would be

able to anticipate the possibility of such events, such as the

possibility of highly correlated defaults on subprime

mortgages in the financial crisis (Roberts and Jones 2009).

With regards to financial innovation, Stiglitz (2010, p. 8)

argues that innovations such as collateralised debt obliga-

tions and credit default swaps increased risk rather than

reduced it, and a ‘transformation’ of banking may therefore

include the development of innovative products that help

the banks’ clients (businesses and individuals) to manage

risk rather than expose them to more. (At this stage it might

be helpful to point out that derivatives were originally

developed to reduce the risk for businesses, for example,

by insuring them against currency fluctuations or changes

in commodity prices, rather than for financial speculation).

An interesting question to explore, especially with finance

students, would be what are truly welfare-enhancing

financial innovations, for example, what would a mortgage

product look like that protected borrowers from the risks of

home ownership such as the variability of interest rates

(Stiglitz 2010, p. 112).

Students could also discuss a modified re-introduction of

the Glass–Steagall Act, which prescribed the separation of

deposit taking (and deposit-based lending) from securities

trading (Augar 2009, p. 229) and thus did prohibit practices

such as securitisation (for an introduction to the Glass–Stea-

gall Act see: http://topics.nytimes.com/topics/reference/

timestopics/subjects/g/glass_steagall_act_1933/index.html).

A re-introduction of the Act would prevent speculative high-

risk/high-return (or high-loss) activity from ‘contaminating’

or destabilising the essential deposit taking/loan making

function of banking (see Stiglitz 2010, p. 115). The separation

of retail and investment banking would also entail consider-

ation of what the proper function of investment banking is.

Augar (2009, p. 229), for example, argues that investment

banks should be pure trading houses, engaged in the under-

writing and trading of securities (market making function),

whilst being prohibited from advisory activities that could

create conflicts of interest for them, and that should be pro-

vided instead by separate advisory firms. (This aspect is not

covered in the film but what emerged during the financial

crisis was that banks recommended MBS as safe investments

whilst at the same time betting that their value would go down

[e.g. Stiglitz 2010, pp. 333–334]).

5 Students might note that Sam Rogers, in his final speech to the

traders (01:10:22–01:12:40), makes reference to the traders having

contributed to a ‘greater good’. However, in view of the ensuing

financial crisis, his assertions sound somewhat hollow and might be a

rather desperate attempt to convince the traders and himself that the

fire sale is legitimate. 6

I owe this insight to a scene in Inside Job (2010). 7

For the purposes of classroom discussion, the following definition

of ‘social contract’ taken from an article by Hasnas (1998) may be

used: ‘Social contract theory asserts that all businesses are ethically

obligated to enhance the welfare of society by satisfying consumer

and employee interests without violating any of the general canons of

justice… Social contract theory posits an implicit contract between the members of society and businesses in which the members of

society grant businesses the right to exist in return for certain

specified benefits.’ 8

The following article on the public purpose of banking, issued by

the Roosevelt Institute, could be used as a teaching resource here:

http://www.rooseveltinstitute.org/new-roosevelt/attention-lloyd-

blankfein-public-purpose-banking.

652 A. Werner

123

Another, complementary, focus of the discussion could

be on the importance of transparency in relation to banking

practices, especially as banks have been accused of delib-

erately keeping a lot of their activities non-transparent and

taking advantage of information asymmetries. Transpar-

ency might relate to the information that is given to clients

about the nature of financial products, including their risks,

composition and complexity, as well as to the accounting

practices of banks, especially information on off-balance

sheet activities—all of which would improve clients’

decision-making (Stiglitz 2010, pp. 160, 169, 174–175). As

has been pointed out by observers though, in order for this

to happen, incentives that encourage non-transparent

behaviour, such as short-term bonuses on products carrying

long-term risk, would have to be removed (ibid., p. 14).

All of above suggestions inevitably raise the question

how this transformation of the banking sector may be

achieved: by regulation, by self-regulation or by a mixture

of both (most commentators are in favour of strong regu-

lation). Whereas a pessimistic view may tend towards the

regulation view, the film opens up the possibility to con-

sider that transformation might happen because people

want to work in a renewed banking sector.

Commentators speak of a ‘misallocation of human tal-

ent’, that is, that highly talented graduates from all disci-

plines were being lured to the financial sector by the

prospect of getting rich (Stiglitz 2010, p. 276), to help the

banks create and sell innovative products (Augar 2009,

p. 224). An example in the film is Peter, who abandoned a

career as astrophysicist to work as a well-remunerated risk

analyst. But going back to above scenes, we might be able

to see though that engaging in activities that have socially

useful outcomes, as Eric did in his previous career, might

be ultimately more satisfying than working in an environ-

ment with a ‘winners/losers’ mentality, as Seth reflects so

perceptively. These observations might lead students to

consider more generally what it means to be a professional,

someone who is solely defined by a particular skills and

knowledge set needed to carry out a particular set of

activities or someone who uses their knowledge and skills

set to engage in activities that are defined by a commitment

to a good broader than individual and corporate self-

interest (Donaldson 2000). These considerations could be

tied in with earlier reflections on money and happiness,

which may also include discussions regarding the social

status of bankers in society.

Concluding Remarks

The aim of this article was to set out how the film Margin

Call and the themes and topics that it addresses can be used

for business ethics teaching. The film depicts decision-

making in an extreme, morally ambiguous situation, and, as

it brings out the tensions and dilemmas that those involved

in the bank experience, may leave the students with a

feeling of uneasiness and perhaps even some empathy for

the course of action that was eventually taken. However,

exploration of the factors that influenced behaviours and

decision-making in the bank as set out in the sections

above, such as the use of incentives, the effect of organi-

sational power structures, and the factors that detached

those working for the bank from the moral consequences of

their actions, should lead students to develop a more crit-

ical view of what has been happening in the film. The film

thus provides starting points for discussion on what needs

to change in corporate cultures such as the one portrayed in

the film, to prevent such situations from happening, and for

discussions on how ethical organisations can be built. As

such, the film provides suitable material for general busi-

ness ethics classes focusing on descriptive business ethics.

At the same time, along with suitable supplementary

reading/teaching that provide more detailed knowledge of

the financial crisis and how banks were implicated in it,

there are scenes in the film that provide starting points for

discussion on how the banking sector may be transformed,

so that it will serve society’s needs and not harm it. This

may be particularly a focus in classes teaching ethics in

finance. Finally, the film’s aim to tell a human story, by

drawing out how the characters experience, and reflect on,

the crisis situation and by giving glimpses into the char-

acters’ personal lives, opens up opportunities for students

to reflect on their own experiences and priorities.

Acknowledgments The author would like to thank the three anonymous reviewers for their helpful comments and feedback.

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