Regulating Wages on Wall Street

Nate Silver has interesting idea:

My hunch is that the financial services sector has been artificially limiting its labor pool by confining its hiring to an extremely high number of elite undergraduate and business schools, such as the Ivy League, the U. of Chicago, Stanford and M.I.T. Maybe the reason that Marvin is an investment banker and Melvin an engineer is because Marvin went to Yale and Melvin went to Purdue, and the bank only recruits at Yale and not at Purdue. Indeed, while the participation of Ivy League graduates in leadership positions in non-financial companies has been decreasing, the same has not been true at investment banks. One can easily imagine, moreover, how this trend could be self-perpetuating. You get a bunch of Harvard, Yale and Stanford grads in management positions at investment banks, and they're probably going to be predisposed to hire other Harvard, Yale and Stanford grads.
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That is, the excessive wages paid by Wall Street not only lures talent away from other parts of the private sector, but also from the public sector, where employees are subject to government wage controls. The very people who might be the most capable of enforcing regulations on the banks instead wind up working for them.

Isn't there some truth to what Nate Silver is saying? The private sector (as well as citizens) criticizes the public sector all the time on how inefficient the government is or how lazy the government employees are, for example. But no one steps up in fixing the government, may be because the talents are being drawn elsewhere? I know that the answers are not clear-cut, but it's still thought-provoking. The question itself is not new. It certainly has been discussed before.