How ‘Wall Street’ Sequel Tripped on Reality

Stephen Schiff isn’t a trader or a banker, but he knows first-hand about the convulsions on Wall Street. He is the screenwriter who wrote was was supposed to be Gordon Gekko’s long-awaited comeback vehicle — only to have the landscape of Wall Street ripped up and rearranged in the months after his final draft was turned in.

“I’m certain my former masters at Fox will find a way to make a Wall Street sequel for a planet on which Wall Street has ceased to exist, and I wish them every success,” Mr. Schiff wrote on a post in The Daily Beast.

In the meantime, he said, he has been left wondering about all the predictions he heard from Wall Streeters during his research for the movie — predictions that, by and large, were completely off the mark.

As he traveled from New York to London to Dubai, speaking with people who were plugged into high finance, it seemed that one topic dominated the conversation, Mr. Schiff wrote: “Bankers wanted to talk about hedge funds. Oligarchs wanted to talk about hedge funds. Journalists wanted to talk about hedge funds.”

There was an obsession with these secretive investment pools, which seemed to have a license to print money, as well as the expensive-art-buying, mansion-building people who ran them.

Fast forward to October: Many of the most prominent hedge fund managers are sounding downright humble, apologizing to wealthy investors for double-digit losses at their flagship funds. Not exactly the Hollywood image of a high-flying hedge fund guru.

As for the question of what might cause the next Big Meltdown on Wall Street, Mr. Schiff said the people he interviewed once again missed the big story. Many suggested terrorists or China were the most serious threats, but reality deviated from that script.

Mr. Schiff wrote:

The funny thing is, not one of them mentioned the crash in housing prices. Not one mentioned subprime mortgages or mortgage-backed securities. No one imagined Bear Stearns going under, or Lehman Brothers, or AIG. No one foresaw banks Like WaMu and Wachovia crumbling.