We propose a career choice model in which agents of di erential ability levels choose to work
as bankers or as nancial regulators. When workers receive intrinsic bene ts from working in
regulation (such as public-sector motivation or human capital improvement), our model predicts
that bankers are, on average, more skilled than regulators and their compensation is more sensitive to performance. During nancial booms, banks draw the best workers away from the regulatory sector and misbehavior increases. In a dynamic extension of our model, young regulators accumulate human capital and the best ones switch to banking in mid-career.