So, under the auspices of the University of Illinois College of Law's Program in Business Law and Policy, my co-director Larry Ribstein and I hosted some law students at a private screening of Wall Street 2: Money Never Sleeps this morning. I’m going to blog first about the much-anticipated sequel to Wall Street, then Larry will give his take on TOTM. (Larry has pre-blogged the movie, sight unseen, at Forbes.com.)

First of all, I enjoyed it, and I think it’s worth seeing. There are several shout-outs to the first movie, and even one to probably my favorite Michael Douglas movie (major props to the first to comment on that one!). (The subtitle is a Gordon Gekko line in the first movie, for example). Bud Fox makes an appearance, and history revises his role in bringing Gordon Gekko down to a minor one, for plot purposes. Moreover, for corporate law types, the movie is a snapshot of Fall 2008, which is just far enough from now to have nostalgic value.

In fact, the movie can almost be called historical fiction. Our hero, Jacob Moore (this time a hungry kid from Long Island, not a hungry kid from Queens) works at a venerable investment bank, Keller Zebel, that is the first to suffer massive losses for holding assets (probably MBS) its 70-ish managing partner didn’t understand. The government lets the bank fail. However, the housing market will soon put all the major investment banks and commercial banks in jeopardy, requiring a "$700 to $800 billion" bailout in order to prevent "the end of the world." The remaining Wall Street behometh survives, led by Bretton James, though we are told that the firm saw the housing market collapse coming and bet against the market the whole time. (This is presented as a bad thing.) Moreover, Churchill Schwartz persuaded the Treasury (seemingly now led by James’s mentor) to require that its credit default swaps be honored "one hundred cents on the dollar." Worse yet, we are told that James spread false rumours about Keller Zebel’s financial stability which caused its shares to free fall. Of course, this firm is Goldman Sachs, the non-rescued victim is Lehman Brothers, and the villain must be avenged. So, just as the first movie was a fictionalized account of the Ivan Boesky-Michael Milkin era, this movie is a fictionalized account of the 2008 bailout.

There’s a lot here for the corporate law blogger. There are two bad guys: speculation and moral hazard. In general, there’s a demonization of the financialization of the U.S. capital markets. Much is made of the rise of financial services and demise of true industry (one of the big themes in the first movie), but the added dimension here is speculation, particularly short-selling and outsider trading. As Gordon Gekko, now an ex-convict with a book he’s hawking, tells us, the new devil is speculation. Betting against companies is evil; investing in companies you know are good companies is good. The methods for speculation (derivatives) are suspect because no one understands them. And to top it off, leverage is the icing on the hell-cake.

What about greed? This is the interesting part. Gordon now gives the speech on greed, and it isn’t pretty. What got us into the housing crisis? Your parents’ greed, no their envy. Their refinancing their house to go the mall. Ouch. And Jacob’s mom is part of the problem. She left a real profession (nursing) to go into real estate. (Note at the end when James is taken down, there is a piece of art by Richard Prince titled "Second Chance Nurse" behind him.) And she gets eaten alive in real estate. Though Bud had to get loans from his blue-collar parents, Jake has to support his mom’s losses. He even tries to explain moral hazard to her as he writes her another check. (This now-household concept isn’t quite explained to a lay audience. Gekko explains to a woman at a book signing that it is "taking other people’s money and not having responsiblity").

Jacob is a much more sympathetic character than Bud, and Gordon isn’t quite as charismatic. Jacob (and his "leftist blogger" fiancee) are the moral center of the movie that Bud’s father was in the original. Jacob is a hard worker, very smart, and very aggressive, but he doesn’t seem to be in love with money and is suspicious of easy money. When he retaliates against James by doing a little outside trading campaign on Churchill stock, he himself does not put in any money, missing out on profits. When given a bonus, he buys an engagement ring and invests the rest in his own company to show his loyal confidence in the firm. Jacob’s Bluestar Airlines is a start-up company doing research in alternative fuels, which he thinks will change the world. Gordon, on the other hand, is a Wall Street pariah, and though he claims to have gained insight in prison, it’s not that visible. His attempts to reconcile with his daughter (Winnie, Jake’s fiancee) seem to be motivated more by his need to explain himself and by financial gain than by love.

From reading Larry’s work and talking to him, I was sensitized to the father-son themes in the first movie. That theme is even louder in the second movie, plus there is a daughter-father dimension (although it’s actually just a reflection of the relationship between the brother/son and father). Just as the original movie had an additional layer because of the Sheen’s father-son connection, this movie has a strange overlay given Michael Douglas’s son’s recent drug troubles (leading to a prison term), which Douglas has publicly attributed to his lack of attention to him during his earlier career. Many of the lines Gekko says regarding his son’s drug troubles and fatal overdose ring familiar.

The last interesting theme in the movie is the equating of investment in socially responsible issuers with philanthropy. In fact, supporting social entrepreneurship is depicted as much more noble than philanthropy (extremely over-the-top Alzheimer’s fundraiser at the Met; another fundraiser at James’ house). Jacob and Winnie don’t want money for themselves, they want funding for the noble start-up company.

Is it the perfect movie? No. The ending is sort of lame and doesn’t quite follow from the characters’ motivations, which were stated about 60 second before the wrap-up begins. The trump card that Jacob plays against Gekko to bring about that ending is such a deus ex machina that I thought Jacob was bluffing. Surely if he wasn’t bluffing, this would have come up in conversations that were just depicted on screen. But he’s not. So yes, it’s not an amazing movie, but it’s a fun walk down Wall Street for those of us who were paying attention.

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