I am a big fan of Wall Street, Masters-of-the-Universe type movies. I got into them after the 2008 crisis that led to the collapse of Lehman Brothers and was fascinated to learn about what happened in the boardrooms, before and after.
When Chase Bank closed, and details of what was discussed in the weeks prior to the closure became public, I was decided to rewatch the list of the movies. It was very interesting to imagine the scenes in ‘Too Big to Fail’ playing out in boardrooms at Riverside and along Haile Selassie Avenue.
Margin Call is my favourite Wall Street movie. The story takes place over a 36-hour period at a large Wall Street investment bank and highlights the initial stages of the financial crisis of 2007–08. In focus are the actions taken by a group of employees during the subsequent financial collapse.
Just before the scene below, an analyst has discovered that the mortgage-backed securities the company deals have been breaking the volatility limits several times over the prior couple of months, and given how highly geared the company was, a small swing in the wrong direction would kill the company. Or, in short, they were about to get effed.
In the scene below, the management team is assembled in the boardroom waiting for the Chairman of the Board to make a decision on what would happen next.
I love this scene and have re-watched it 0ver and over. Possibly because John Tuld is played by Jeremy Irons, the same guy that voiced “Scar” in the Lion King.But, over and above the man-crush, those 9 minutes are an MBA in themselves.
- Walk softly, but carry a big stick
- “Spilled milk, under the bridge” – This phrase, in all its Spoonerism glory, stuck with me and became part of my everyday. It’s a great reminder that if things are one, they are done. Looking back, passing blame and spending time in ‘could-be’ is nothing but a waste of time. Assess the situation, and move forward.
- Get to the point: Tuld first tells Jared to speak to him in plain English, then decides to find out the problem from the analyst, who he asks to speak to him as he would a small child or a golden retriever. He is not interested in the technical language or fluff but wants to get to the crux of the matter, preferably from the source itself.
- When Tuld insists that Sullivan explain the problem to him, he is acknowledging that Sullivan has something of significance to tell him, no withstanding that Sullivan is at the lower end of the corporate totem. Often time, top heads only get information from their immediate subordinates, who may not understand what exactly the problem is, or even worse, have understood their own thing.
- “I can assure you, it wasn’t brains that got me here.” The most interesting thing was that the rocket scientist in the room, Sullivan, was at the bottom of the ranks. Brains can only take you so far, if that.
- Empower the minions: Tuld does that twice. First, by asking Sullivan to speak, and secondly, when Sullivan stutters and looks at his boss’ boss, Jared, Tuld reminds him “You are speaking with me, Mr. Sullivan”
- Know your role: “Do you know why I…earn the big bucks? I am here to guess what the music might do a week, a month, a year from now. That’s it” There are two lessons in this quote. the first is that, as the leader, you need to know what your role is. Often time, leaders do not, and end up being in everybody’s business. The second is to stick to your role and let your team do their thing.
- Get the best people around you and let them do their thing. In the whole scene, all Tuld does is ask questions, to understand the situation, then asks his deputies to come up with the solutions, starting off with Cole and Robertson. When Jared hesitates, Tuld reminds him of the principle that guides him: Be first, be smarter or cheat. Cole presents him with a plan, and he turns to Sam, who would be responsible for carrying out the plan.
- Cover your ass: Tuld asks Sam where it would come back to bite them in the ass. When Sam lays out a plan and points out the cops would be in there checking, Tuld turns to Ramesh, his legal guy to see if they would be liable, and Ramesh gives him the go ahead. Before making a move, they have anticipated what would happen and assessed how back it could get.
- Be prepared to pay the cost to be the boss: When Sam outlines how they would execute Jared’s plan, he points out to Tuld that they cost would be. Of course, the question of ethics arises. It’s pretty interesting to see how they rationalise their actions. “It’s yours to sell”, ” Willing buyer, willing seller”
Did I miss anything?