No second acts? Apparently Fitzgerald had not anticipated John Devaney.

I’ve never been sure whether F. Scott Fitzgerald was being serious when he wrote that “there are no second acts in American lives.” After all, it was just a note for the manuscript of the novel – The Last Tycoon - he was working on when he died. He didn’t really say it officially. Maybe he was in his cups when he wrote it.

Anyway, while acknowledging the sad truth that some of us don’t even get first acts, if there’s one place on the face of the earth where it’s possible to cram in a second act, third act, curtain call, and entirely new show, it’s the good old U.S. of A.

While the public instances of second acts are numerous – remember that the Richard Nixon that we weren’t going o have to kick around any more went on to become president – there are also plenty of lesser-knowns who stage a comeback.

One such character, hedge fundie John Devaney, was introduced to us in a recent WSJ article.

Actually, let’s make that re-introduced, as those who followed the path of the economy’s meltdown will recognized Devaney’s footprints:

Time magazine ranked Mr. Devaney in 2009 one of the "25 People to Blame for the Financial Crisis." (In an online version of the list, he was No. 18, just ahead of Ponzi-scheme mastermind Bernard L. Madoff.)

While Devaney got a ration of the blame for the crisis – his $650M fund, which specialized in sub-prime mortgage instruments, went to zero: ill luck for his investors – he didn’t get out of it scot free. He personally lost $100M, and had to do a bit of downsizing, shucking:

… a $36 million jet, $10 million helicopter, $45 million art collection and $22 million yacht called "Positive Carry," named for an investment strategy that rakes in easy money.

He also, sniff, sniff, gave up a Renoir, but I have an idea for him here. You can piece together an arty puzzle from a museum and spray some gluey stuff over it to make a poster. If you hang it in a room with dim enough lighting, no one will know the difference. I did this once with a couple of puzzles that were Harper’s covers from the 1920’s or 1930’s, and they came out really cool. (You can find the instructions here.)

All, of course, was not lost. Devaney managed to hang on to a cool $125M; a 16,000 square-foot manse in the Bahamas; and the 125-foot (lesser) yacht that he uses to commute from his Key West offices to spend quality time with the fam in the Bahamas. (Turning that Renoir puzzle into wall art might be a neat family project.)

Devaney is only 41, so it’s actually a good thing that he got a second act. (Come to think of it, Bernie Madoff got a second act, too. Only his is behind bars.)

But it does sound like Devaney’s second act might be a Groundhog Day replica of the first.

His United Capital Markets business “is booming, especially for subprime mortgage bonds.”

In Devaney’s words:

"My niche is trading very complex and extremely illiquid stuff."

Hmmmmm.

Wouldn’t you think twice before investing with a guy who’s prior fund went to zero, and who’s still tinkering with the same instruments that brought the fund and, oh yeah, the economy to its knees. (What’s a little collateral damage among friends.) And that “extremely illiquid” would sure give me some pause. Just my luck as an investor that that extreme illiquidity would kick in just when I needed a drink.

Here’s Devaney, again, in the halcyon Act One days before his fund turned into one 100% illiquid puddle:

"The consumer has to be an idiot to take one of those loans, but it has been one of our best-performing investments," he said in a 2007 interview with Money magazine, referring to option adjustable-rate mortgages with tiny initial payments that soon skyrocketed.

Couldn’t agree more, but might it also hold that the investor has to be a bit of an idiot to throw in with Devaney once again?

Ah, well, no risk, no reward I guess, but what’s different this time around?

Well, one thing different is that in Act Two, Devaney’s no longer a workaholic. Sure, he’s in Florida during the week, but he gest to kick-back in the Bahamas on weekends. In the bad old days:

"Work was my life, and then this whole crisis happened," he says. "It was a blessing in disguise, because I know 10 billionaires, and every single one of them is divorced."

We’ll have to take Devaney’s word for it that work was his life.

The article mentions that he’s up in the wee hours to play in bond auctions.  If he’s still up working at 3 a.m. as “one of the biggest market makers in the world for certain types of debt,” what did he run before when work was his life? 24/7?

Maybe it’s just me, but Act Two still sounds like a re-run.

Caveat investor and, hey, I hope there are enough regulations in place this time around to keep the economy from re-toppling if Act Two comes a-cropper.