I had an interesting e-mail exchange yesterday with a finance expert thinking of moving to DC. Come, I said. There's work for you. And there is! Too much, in fact. One of the problems bedeviling Washington's response to the financial crisis is that there's very little financial expertise outside Wall Street. There's some in the regulatory sector. But just about none in the ideas industry. And there's a reason for that. I'm not going to say finance is boring, but the sort of people who are interested in it tend to be the people who are interested in making money in finance, not in moving to DC and taking an entry level job at Brookings for $32,000 a year. And it's not as if Wall Street has been picky about hiring in recent years.
That's a problem, though. For instance: Everyone knows that the coming fight is on the shape of financial regulation going forward. But the think tanks and advocacy groups have been curiously silent on how that should look. An administration official speculated to me recently that that's because they don't have sufficient in-house expertise. That deficiency, however, is not shared by Wall Street, and some banks, like Goldman Sachs, have already begun releasing their regulatory proposals. And in the absence of other sources of expertise, that's where Congress will turn.
Happily, we're in a moment now where there are a lot of unemployed bankers and traders. It's a buyer's market for Wall Street expertise. But I've not heard of think tanks making quick acquisitions. I've not seen many chastened young bankers moving to DC. Official Washington, however, needs to flip some of these disillusioned kids. Among the crisis's many lessons is that DC can't ignore Wall Street. But if CAP is going to snatch any human capital from the financial sector, now's really the time.
Related: For a really good take on the regulatory side of all this, see William Buiter's manifesto.