ARNOLD SCHWARZENEGGER SHOULD ONLY HOPE THAT PAUL WACHTER has better luck managing the California governor's money than he is having with the University of California's. Wachter, who controls Schwarzenegger's multimillion-dollar blind trust, chairs the investment committee of UC's retirement and endowment funds. By the time he came on board in 2004, UC's plan, once among the nation's best-performing and best-funded, found itself caught in a downward spiral that has spooked the system's managers and beneficiaries alike, and thrown the always fractious university community into an uproar. Now irate labor and academic critics, joined by some state politicians, are lambasting some of the prominent regents who oversee the system. It's an extraordinary turn of events for the proud institution, whose faculty has won 50 Nobel prizes, including five in economics in the past seven years. UC's coffers had been filled to overflowing for so long that in 1990 the regents --...