The movie Margin Call is unique. Unlike The Big Short and Too Big to Fail, Margin Call does not mention real-life names. The movie does not even mention the name of the investment bank that was in trouble. So, you have to kind of guess reality about the plot of the movie from the real-life events.
John Tuld’s character was fictional, but some real people acted similarly.
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Was the Investment Bank real?
When you compare real-life events that happened in 2008 with the movie, you can guess that the investment bank shown in the movie was most likely Lehman Brothers. Some people also say that the bank was Merrill Lynch. But you can 100% say that Merrill Lynch is not the bank in the movie, because during the fire sale scene, you can see that one of the agents calls Merrill Lynch to sell them the MBS assets.
Another proof that the bank in the movie was Lehman Brothers is that the bank in the movie had $1.2 trillion exposure to mortgage-backed securities. Now the movie does not mention any number at all, but if you read the original script of the movie, you will see this $1.2 trillion number is mentioned by Peter Sullivan to John Tuld in the meeting.
Surprisingly, when the Lehman Brothers filed for bankruptcy in September 2008, the creditors claimed $1.2 trillion from the Lehman Brothers. This confirms the bank in the movie was Lehman Brothers.
Real John Tuld
There are also some guesses that John Tuld’s character is based on the CEOs of multiple banks. The first one is Lehman Brothers, whose CEO was Richard Fuld, and the other is Merrill Lynch, whose CEO was John Thain. You can see that the name John Tuld is a combination and slight variation of the names of these two CEOs. Both John Thain and Richard Fuld were key people in the financial crisis of 2008, and their actions can set up a background for John Tuld’s character.
In the finance world, power is often consolidated in the hands of very few people, whose decisions can sway markets, economies, and the lives of millions. Similar to the character of John Tuld, these people operate behind closed doors, making high-stakes decisions that have far-reaching consequences.
Character of John Tuld
Only the name John Tuld is the amalgamation of the two CEOs of the different investment banks. However, the powerful and enigmatic character of John Tuld’s actions bears a resemblance to the former CEO of Lehman Brothers. As the head of one of the largest investment banks, Richard Fuld played a central role in the events leading up to the 2008 financial crisis.
Let’s see some similarities between Richard Fuld and John Tuld’s characters and actions. Lehman, under Richard Fuld, kept selling these toxic MBS assets as they were extremely profitable. Similarly, John Tuld’s firm also kept selling these toxic assets as they were very profitable.
John Tuld initially refused to acknowledge how severe the situation would get and delayed taking action to address their financial problems. This initial denial and delay ultimately led to the crisis and made it more difficult to recover.
Similarly, in September 2008, people perceived Richard Fuld as not fully acknowledging the severity of the situation. Instead, he even expressed optimism about Lehman’s ability to sustain the storm and downplayed the extent of Lehman Brothers’ financial troubles.
As you watch the movie, you learn that the bank has neglected the risk because it was buying home loans from commercial banks. Their bank bought these loans much above their risk limit; that’s why you see Peter Sullivan explaining that a 25% decline in their asset will lead to a loss of more than the current market capitalization of their bank.
Lehman Brothers was in a similar situation, and they also did not anticipate the risk properly. During the crisis, Lehman Brothers had a leverage ratio of about 30 times its equity. This means that for every dollar of equity, Lehman had $30 in assets. In simple terms, if Lehman had $1 of their own, then they borrowed $30 to invest in other assets.
Richard Fuld oversaw all this borrowing at Lehman. In the movie, John Tuld oversees similar borrowing at the bank.
Focusing on Profits
Before the 2008 crisis, critics accused Lehman Brothers’ executives of prioritizing short-term profits over long-term stability. In the meeting, John Tuld prioritized short-term profits and sustaining the bank, regardless of the long-term consequences.
These are some of the similarities you will find between John Tuld’s action and Richard Fuld’s approach during the 2008 crisis.
During the 2008 crisis, almost all the key people on Wall Street behaved similarly. That’s why not everyone agrees on the extent of the similarities between John Tuld and Richard Fuld from Lehman Brothers. Some people say that John Tuld is more representative of Merrill Lynch’s CEO, John Thain. As mentioned earlier, the bank in the movie is not Merrill Lynch, so it is unlikely that John Tuld’s character resembles John Thain.
Some people also believe that Tuld is a composite of several different Wall Street people. But the similarities and actions taken between Tuld and Lehman Brothers are kind of similar. So, a major part of John Tuld’s character is influenced by Richard Fuld.
It is up to you to decide what to believe and how to relate John Tuld’s character to any other person on Wall Street.
Movie vs Reality
Now it is shown in the movie that the bank gets itself out of trouble after the fire sale. But in reality, the Lehman Brothers collapsed. The bank in the movie saves itself for the short term. In the long term, it might have collapsed. That last part is left to the imagination of the viewer.
Overall, the movie tries to portray John Tuld as a typical big persona from Wall Street. Who is powerful and authoritative, his decisions hold immense weight, and his presence commands respect. He is also ruthless in executing his decisions, prioritizing self-preservation and the survival of the institution over ethical considerations. He is also detached from the consequences of his ruthless decisions, which might affect other people badly.
Appreciation/Conclusion
One thing you can not deny is that Jeremy Irons played John Tuld’s character perfectly. Every time he is on the screen, he just steals the show. The movie keeps you on the edge till the end, and John Tuld’s character just keeps you glued to the screen.
We hope you now have some idea about the background of John Tuld. If you want to learn more about the Big Short and the 2008 crisis, then you should watch this playlist.
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