Often, their skills extend far beyond just math. In order to succeed on Wall Street, you not only need above average quantitative skills, but you also must have an insane work ethic, a lighting-fast mind, problem-solving prowess, and phenomenal interpersonal skills. In fact, a knack for forming strong relationships with clients is arguably far more important than knowing math once a banker reaches a certain level.
A lot of these same characteristics are very attractive in Washington. Indeed, that's why so many from Washington, like former White House budget director Peter Orszag, also make the easy transition to Wall Street. To avoid anyone with Wall Street experience would be to push aside some of the best and brightest minds in the world.
Real World Experience Actually Matters
But that's only part of it. Certainly there are other very smart, talented people out there who could fill government positions. There are career regulators and bureaucrats. There are academics. Why not choose from those pools? They lack real world business experience, which is often very desirable from political and practical perspectives. There's a difference between having an adviser responding, "Based on my knowledge of economics, I think that business will. . ." and "Based on my 20 years experience in the private sector, I know that business will. . . "
Still, why Wall Street? Surely there are other titans of industry to choose from. Why not a tech CEO? How about someone who runs a pharmaceutical firm? What about a manufacturing company head?
It's a little harder to explain why other industries don't have as substantial a showing in Washington. But here's a theory, based on three kinds of Wall Street types. Let's go through those first:
The Retired Career Banker Seeking Power or an Opportunity to Give Back
Think former Treasury Secretaries Henry Paulson and Robert Rubin, and former New Jersey Senator and Governor Jon Corzine. All three of these individuals made more money on Wall Street than they could reasonably spend in their lifetime. As a result, they didn't need to keep making more money, so they sought something else. That new desired end depends on the person. Once some people are done with money, they seek greater power or influence, so they move to politics. Others genuinely feel that the world has been good to them, so they want to give back and enter public service.
Next, there's the type that goes back and forth every few years from Washington to Wall Street. Perhaps William Daley is of this sort, even though most of his finance experience was in Chicago, instead of New York. He worked in banking and law for a while. Then he went to Washington to serve as Bill Clinton's Commerce Secretary. Before long, he ended up back at a bank. Now he may be back to Washington, working as Obama's chief of staff. This type has political aspirations, but is practical enough to know that money matters. So years in banking are sprinkled in with public service to pay the bills and build connections.