So what happens when the Wall Street financial scene implodes on itself if you’re one of those who was working there? Apparently, you move to Washington D.C. and work at a think tank or one of the now growing regulatory agencies. So much so that D.C. metro home prices went up almost 2% in 2009. A Reuters article today goes into the reasoning behind the movement and interviewed a few people.

I find this movement fascinating and horrifying.

A few reasons:

1. Integration: If the people who worked on Wall Street during the crash are going to be staffing government agencies, that is exciting because they will not want to repeat it. It’s also scary because that means Washington is infiltrated even more by people with financial/hedge fund/ Wall Street backgrounds- and if they are making policy, they will make it with that kind of perspective. Which means an even further integration of governing and money.
2. Jobs: Of all the places to be growing, it’s interesting that it’s the financial regulatory world- and it’s being staffed with, I presume, hardcore Republicans who would probably want the governement to stay out of their business- or at least would have when they worked on Wall Street. Now they are the ones making and enforcing those and new rules.

Reuters tries to paint the scene in Washington D.C. as much more sparse and bare-bones than New York City investment bank firms. Fair enough, but I don’t know how much I buy the idea that once Wall Street collapsed all the executives suddenly had an epiphany and want to make things fair, balanced and well regulated now. Talk to me in 3 years and we’ll see how that’s going. In the past executives moved to Washington after they made a bunch of money on Wall Street. Now I assume they are moving there to up their status because the money in Wall Street dried up.

And on the integration of government and money, doesn’t this sentence just scare the cents out of you? “The U.S. Securities and Exchange Commission recently hired former hedge fund executive Richard Bookstaber…”

Hedge fund executives on the Securities and Exchange Commission?

Do you know what the SEC is supposed to be doing? “The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.” – SEC What We Do page

I mean, I get the idea- it’s like hiring poker cheats or computer hackers to the police force because they know how it works. But still…

The SEC has a new division of risk, strategy and financial innovation. All in the same division. These are experts in derivatives and hedge funds and all that stuff nobody understands. And apparently the Wall Street people all thought it was at least ok-enough to do it as their job- so, what’s the deal?

"We are looking at people with PhDs in finance, more quantitative types, people with market expertise to people who not only know particular practices but who are smart enough to be flexible as practices change," said Director Henry Hu,  a University of Texas law school professor.

What do you think?

Photo Credit: DavidDMuir (via Flickr under CCL)