By Karey Wutkowski and Rachelle Younglai
WASHINGTON (Reuters) - On Joe Jiampietro's first day at the Federal Deposit Insurance Corp last year, he walked into his office and found a windowless room devoid of even a computer.
It was a far cry from the cushy office he left behind when he worked as an investment banker JPMorgan in New York, and a stark sign of the fact that although he was just a few hundred miles south of New York in Washington, he was in a new world.
Jiampietro did not mind much. "I could have been in a telephone booth and I would have been happy and excited," he said during an interview in his now-upgraded office at the FDIC, complete with sunlight and multiple computer screens.
Moving to Washington was long seen as a way for a successful high-level financial executive to burnish his or her career after making their fortune, but was rarely an interesting option for mid-level professionals.
But now, Washington is where the action is, and Wall Street executives are increasingly moving to the city in hopes of reforming the financial system.
The impact on Washington is palpable. Home prices in the metro area managed to rise nearly 2 percent in 2009, compared with a 6.3 percent decline for New York, according to the Case-Shiller Home Price index report earlier this week.
Government agencies are routinely hiring former Wall Street luminaries and even mid-level employees.
The U.S. Securities and Exchange Commission recently hired former hedge fund executive Richard Bookstaber and former private sector lawyers Adam Glass and Bruce Kraus.
They are joining the SEC's newly created division of risk, strategy and financial innovation whose director, Henry Hu -- a University of Texas law school professor -- is known for his research on derivatives, risk management and other financial products.
Hu's division at the SEC is in charge of identifying new risks in financial markets, and he says he is hiring more professionals.
"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," Hu told Reuters.
The SEC is seeking Wall Street's help to bolster its expertise in everything from trading, mutual funds and risk management to complex derivatives products.
"We are looking all over the place," said Hu, who was asked to head the division by SEC Chairman Mary Schapiro.
With many jobs on Wall Street having disappeared for good, there are plenty of talented people looking for work.
TURNING ITSELF AROUND
The financial crisis was a black eye for the banking system, which required more than a trillion dollars of government support, but regulators also shoulder some of the blame for the meltdown.
Lax regulatory oversight during the meltdown allowed questionable lending and underwriting to proliferate.
The SEC's enforcement and exams divisions, slammed for missing Bernard Madoff's $65 billion fraud, are being overhauled so that the SEC can better spot wrongdoing.
There is less money to be made in Washington, but there may be more satisfaction in the work, former Wall Streeters say.
Douglas Elliott, who himself left JPMorgan seven years ago and works at the Brookings Institution think tank, said he reached a point where he wanted to do good.
"I've always been interested in public policy and once I reached the point where I had enough money for options to open up for me, I wanted to be able to do something positive for the world," Elliott said.
Jiampietro said he had a growing realization during the financial crisis that he wanted to have a broader impact, after helping individual firms grapple with their troubled assets.
Jiampietro has been working 15-hour days, away from his family who still lives in New York, helping the FDIC structure transactions related to failed banks and generally helping get the bank industry get back up on its feet.
"Having a direct role in all of this just makes you feel good -- you're not just chasing a dollar," he said.
(Reporting by Karey Wutkowski and Rachelle Younglai, editing by Matthew Lewis)