Whatever happened to the real Gordon Gekkos?

Oliver Stone's great villain was inspired by Wall Street's most colourful characters. As he returns to our screens, Stephen Foley uncovers the truth behind the fiction

"I'm small-time compared to these crooks," Gordon Gekko says in Wall Street: Money Never Sleeps. Oliver Stone's serpentine anti-hero is out of prison and out of the big league, surveying a poison landscape dominated by a vastly richer breed of megabank bosses and hedge fund billionaires, feasting off a nation unhinged by debt. Sometimes, Gekko says, prison is the only place to stay sane.

Gekko being Gekko, he wants back in. As for the audience – at the risk of sounding like one of those Mafia apologists, one just feels nostalgic for the days when Wall Street villains were playing by the rules of the game, and only did the dirty on their own kind. As the curtain came down on the star-studded premiere of Money Never Sleeps in Manhattan's Ziegfeld Theatre on Monday night, it was tempting to call out: bring back the old Gordon Gekko, all is forgiven.

All of the Eighties seemed to be summed up in Michael Douglas's red-braced portrait of the triplicitous corporate raider, whose encomium to greed ("for lack of a better word") has been replayed a thousand times. The real Gekkos, the handful of titanic personalities from that period on whom Stone based the character, are gone from view or bit players on Wall Street these days. They are small-time now.

But here we are, 23 years on from the original, and a new financial crisis has persuaded the director to reanimate his creation and set him loose in a new landscape. It sounded like such a good idea. But to get us over the narrative finish-line, Gekko's character is made to fall apart – dramatically, at least – becoming inconsistent and sometimes implausible in Stone's hands. It's as if he had to be sliced and diced on the cutting-room floor into multiple personalities. Why?

Perhaps because of our split response to the man. Stone routinely professes himself amazed at the number of people who come up to him to say that Gekko inspired them to make a career on Wall Street. That was not the intention. "I am against the Gekkos, I am for manufacturing, not speculation," he said at the time. "I think the pigs and the greedies will be offended by the portrait."

In Money Never Sleeps, Stone appears to take the opportunity to put ambiguity to rest. By betraying his own daughter, Gekko is made irredeemably despicable – only to be inexplicably redeemed in the movie's closing scenes. It seems the moral is that there is no emotional feud that $100m of laundered money cannot fix.

"Have I redeemed him? It's up to you," Stone told The Independent after the premiere. "It's nuanced."

How much easier when we could just love to hate him. Gekko Mark One was an amalgam of several of the biggest swinging dicks of the Eighties, and his story was the story of those most intricately tied to an insider trading scandal that rocked Wall Street in 1985. Even some of his best lines were theirs.

"Greed is all right, by the way, greed is healthy," Ivan Boesky said in a university speech in 1985. "You can be greedy and still feel good about yourself."

Boesky, a stock trader whose successes made him feted by the financial press and courted for speaking engagements, was preaching the gospel of greed to a receptive audience in Ronald Reagan's America (with equally eager ears in Thatcherite Britain, an ocean away). This was the coming philosophy. Too much money was tied up in ossifying old industries and companies where leaden managements and Luddite unions were standing in the way of change. Japan was rising. The task was urgent. Corporate takeovers – funded by junk bonds, a new, cheap kind of debt – were the best way to speed the task, bringing in an aggressive new owner, who would bash workers into shape and strip the company to its competitive core.

Boesky was not a right sort. Outsiders might have spotted that through his creepy interviews. "Imagine $500m in a pile of silver dollars," he once told The Atlantic. "I wonder how tall that would be. It would be like Jacob's ladder, wouldn't it? A Jacob's ladder of silver dollars. Imagine – wouldn't that be an aphrodisiac experience, climbing to the top of such a ladder?"

Rudy Giuliani spotted it, as the then-US Attorney in New York pulled on the threads of his insider trading investigation, which centred on the investment bank Drexel Burnham and Michael Milken, the "junk bond king". Milken was the highest-paid banker on Wall Street. There was hardly a single forthcoming takeover deal that he or his subordinates weren't working on, and an underling, Dennis Levine, and Boesky traded tips and bought shares, knowing that the announcement of a takeover bid would send shares flying.

Boesky would be jailed in the very week that Wall Street was released. Milken, too, would admit to securities and reporting violations and serve almost two years in prison. Since then, Milken has reinvented himself as a respectable philanthropist, ploughing his $2bn fortune into cancer research and other health causes. Boesky has never resurfaced. Levine tried it, with a bleating apologia of a book, Inside Out, but he abandoned publicity for the widely panned project halfway through. When Boesky was arrested on 14 November 1986, the Dow Jones Industrial Average, the gauge of the US stock market, fell 43 points, then the fourth-largest drop on record. If all the corporate raiders were exposed in criminal dealing, investors reasoned, who would buy all these companies at their inflated prices?

As Stone worked on Wall Street in 1987 – especially in the final weeks before its release, after the Black Monday stock-market crash – it appeared to one and all that an era was ending. It had been a period that everyone at the time liked to call an era of excess, and Wall Street, set two years earlier, already looked like a period piece. But we know now it was just a warm-up for the vast credit-funded blow-out that was to come. Many of the real-life characters who went into Gekko were not only not cowed by the scandal and the crash, they were emboldened by them.

In Wall Street, Gekko tells his corrupted protégé Bud Fox, played by Charlie Sheen: "If you're not inside, you are outside, OK?" In a single line, this was Stone's error – and the reason that Gordon Gekko rose above the incarcerated fate that the director had fantasised for him, to lure a generation of viewers to jobs in finance. As Irwin Jacobs, a prominent corporate raider from the period who reviewed it for the Chicago Tribune, said of the market manipulation depicted in the film: "This is not a form of business, this is a form of sickness. You don't have to do it that way."

Most of the real-life raiders channelled by Stone to create Gekko were never involved in insider trading, and are still doing their thing today. They have been rebranded, of course. They call themselves activist shareholders, but the impulses remain the same: a joy in the things and the influence that money brings, a thirst for battle and the thrill of outfoxing a rival, and the gripping certainty of the good of the market. If you win, it means you were right, and if you were right, that is because you are allocating capital most efficiently, which means the economy advances, prosperity increases for all. Greed, for lack of a better word, is good.

Carl Icahn, whose hostile takeover of the airline TWA was the inspiration for Gekko's battle over Bluestar in the first movie, clashes with his rivals on the stock-market stage still, at the age of 74. Over the years, Icahn has honed his "anti-Darwinian metaphor" for corporate management. "If you're a survivor, you never have someone beneath you who's smarter than you. So you eventually work your way to CEO. You have someone a little dumber than you underneath, and eventually we'll have morons running everything."

Another Gekko archetype, the Texan oilman T Boone Pickens, is 82 now, and has turned from corporate raider to wind farm investor, funding a public-relations push for wind energy so he can leverage his influence in the gritty negotiations for government subsidies. And Asher Edelman, whose chauffeur-driven Jeep would rock up outside SoHo galleries in the Eighties to transport his latest purchases of works for a collection studded with Miro or Basquiat, has turned to the art world full time, where he is bringing an aggressive and controversial new form of finance to bear, offering loans to fund bidders at art auctions.

Let's say Gordon Gekko is 20 per cent Boesky (illegal), 80 per cent Icahn (triumphant). The intelligence and the wit of the real Gekkos, the acceptance of their model of capitalism, and, yes, the lure of their lifestyles – of course they won. Of course, that is the model of Gekko that we remember fondly, and which will no doubt bring Wall Streeters to the cinemas once again in droves.

In 1987, Wall Street was pure seduction: breathtaking views from an apartment bought with a single bonus. Weekends in the Hamptons playgrounds of the rich and famous. Art. A sushi machine! Daryl Hannah! It is the same with Money Never Sleeps: fast cars, glamorous women, more art, more breathtaking views from another apartment. Motorcycle racing through the wilderness!

There is a new villain on the block in the new film, which opens worldwide tomorrow. The investment bank boss Bretton James, played by Josh Brolin, is the character that Wall Street's in-crowd will be deconstructing, looking to see on whom he has been based. He's majority Jamie Dimon, no doubt about it, since he shares the JPMorgan Chase chief executive's good looks and ruthless exploitation of the recent credit crisis to expand his own company. Similarities between James's bank, Churchill Schwartz, and Goldman Sachs argue for a sliver of Lloyd Blankfein, the Goldman boss who ill-advisedly joked with a journalist that his firm had been doing "God's work". Stone himself has said he was thinking, too, of Robert Rubin, the despised former Treasury secretary, who went on to enrich himself as a director of Citigroup – as that firm hurtled towards collapse.

There is no danger of Bretton James becoming a hero to a generation of wannabe Wall Streeters. He is just too implausibly stupid. A major bank boss, trading shares secretly on his own account? No one in a position of authority on Wall Street would really do that. But he does at least win the "greed is good" line of the sequel. Asked how much money is enough, he replies: "More."

The real Gekkos of the Eighties are small-time compared with these new titans of Wall Street, who – extraordinarily, despite the credit crisis – rule still, untouched at the centre of a tornado of their own making. Today's Gekkos don't need to bother themselves with anything so grubby as buying and running an actual company. The masters of the universe now are the hedge fund managers, whose only business is the moving around of money. And what sums! John Paulson, in bed with Goldman Sachs, constructed a bet on subprime mortgages that netted him $1bn. That was a single trade. He took home $3.7bn in 2008, when Lehman Brothers' employees took their belongings home in boxes. George Soros, who "broke the Bank of England" with his self-fulfilling bet that the pound would fall out of the European Exchange Rate Mechanism in 1992, is still earning ten-figure sums annually now. Steven Cohen's hedge fund has reaped billions, harvesting pennies at a time in uncountable numbers of trades executed by a computer, allowing him to build up perhaps the biggest private art collection in the world, with Picassos and Warhols and De Koonings among them. The cost of repairing Damien Hirst's decomposing shark, also in his collection, estimated at about $100,000, was an "inconsequential" sum, he said.

They have their "greed is good" philosophy, too, the new Gekkos – and they act entirely within the law. Their speculation, their constant churning of the great financial market, it all adds to "liquidity", which means that those quaint, old-fashioned corporate raiders can more easily get into and out of their positions, and capital can be allocated not just efficiently, but quickly. This is the age of the very, very fast buck.

Inevitably, when Gekko is eventually reunited with his money (which has been stashed safely for the duration of his incarceration in a Swiss bank account), he makes a beeline for the hedge fund honey pot. It is his triumphant return from exile, for which he slicks his greying hair back into its Eighties style, and dons Savile Row suits. Don't ask too much about the plausibility of all of this. Just wallow in a brief moment of nostalgia, the familiarity before the contempt. Gordon Gekko is back, but not really, he isn't.

'Wall Street: Money Never Sleeps' opens in the UK on 6 October