It's not uncommon for powerful politicos to leave public service and hop aboard the Wall Street-private equity gravy train. One buyout firm, Carlyle Group, co-founded by a former top adviser to President Jimmy Carter, David Rubenstein, is famous for hiring enough former heads of government (George H.W. Bush, John Major), Cabinet secretaries (James Baker, Frank Carlucci) and other high officials (Richard Darman, William Kennard) to fill the West Wing.

But the migration sometimes goes the other direction, as happened this month when two private equity titans took public-sector jobs: Austin Beutner, who with Roger Altman founded Evercore Partners Inc. and was that firm's president, co-CEO and private equity chief, took over as first deputy mayor of Los Angeles on Jan. 11. A week earlier, Lawrence Schloss (pictured) stepped down as CEO and chairman of Diamond Castle Holdings LLC to become chief investment officer of the city of New York.

Beutner, 49, was appointed by Los Angeles Mayor Antonio Villaraigosa, who also named him chief executive for economic and business policy. He will focus on the revival of the city's economy and fostering job growth. "Our city is at a critical juncture," Beutner said in statement. "After decades of growth, our economy is stagnant and our unemployment is high."

It will be Beutner's second stint in public service. A onetime Blackstone Group LP partner, he worked for the U.S. State Department from 1994 to 1996 to promote private-sector initiatives in Russia after the collapse of the Soviet Union. He returned to Wall Street in 1996 and co-founded Evercore, eventually moving to Los Angeles. At Evercore, he helped engineer leveraged buyouts of Energy Partners Ltd., an oil driller; newspaper insert printer Vertis Inc.; and American Media Inc., publisher of supermarket tabloids, among many other deals. In 2008, after a serious mountain bike accident, he retired. Beutner recently told a reporter he had fully recovered.

On the day he was appointed, Schloss, 55, told The Deal he felt "great" to serve "the city I grew up in, the city I love."

"It was the right time, the right place, the right call," he said.

John Liu, who in November was elected New York's comptroller, offered him the post. Schloss will oversee investing for five city-employee pension funds with $100 billion in total assets.

Before he launched Diamond Castle in 2004, Schloss headed Credit Suisse First Boston's $32 billion alternative asset investment unit. He previously led the private equity arm of Donaldson, Lufkin & Jenrette.