Are CFPB employees making more money than bankers?
Government employees with regulators like the CFPB make more than double the salary of bankers they seek to regulate, according to a new study that’s fuelling discontent in the US financial sector.
Based on the latest available data, the American Enterprise Institute calculated that staff federal regulators earned an average total compensation of $190,000 in 2012 – far more than the $69,266 in annual compensation for the average bank employee.
The blunt report claims to have shattered myths of “greedy” bankers, in an attempt to redirect scrutiny towards the growing federal regulatory muscle at the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC) and the Consumer Financial Protection Bureau (CFPB).
“It is truly a wonder why anyone would want to be a banker if they could be a federal bank regulator,” scholar Paul Kupiec wrote in the study.
Pulling data from the Bureau of Labor Statistic’s occupational employment survey, Kupiec found that the passage of the 2011 Dodd-Frank Act saw a spike in regulator salaries at the FDIC and OCC – jumping to from 2.3 to 2.7 times the average banker salary. He attributed the increases to the provision in the Act that empowers the National Treasury Employees Union to negotiate compensation at “nearly all federal banking agencies.”
Concerns with Veracity
“The headline result is,” Kupiec wrote, “across virtually every job category, the average pay at the federal regulatory agencies is substantially higher than the average pay for the same job in the banking industry.”
In almost all job categories at the CFPB, the report found that average salary and bonus exceeds the private sector – except in the “general attorney” category. Kupiec based the comparison off CFPB job categories listed in a report from the US Office of Personnel Management, matching them with similar private-sector jobs listed in BLS data. But concerns on the validity of such comparisons persisted among financial observes.
The CFPB said the average salary is $117,800 among its 1,300 employees last year. A bureau spokesman did not comment further.
“It’s difficult to compare apples to oranges, but one thing is clear from the analysis: federal government pay is at premium over similar private sector jobs,” said Braden Perry, a former federal enforcement attorney who focuses on financial services compliance at Kennyhertz Perry, LLC.
Perry said banking regulators see portions of their large salary budgets from examination fees and banking insurance, as well as tax dollars. According to the study’s author, banks are forced to pass on the cost of those examination fees to the consumer.
Findings Fuelling Resentment Against CFPB
“In the end, bank shareholders and customers shoulder the costs of excessive salary premiums at the federal bank regulatory agencies,” Kupiec wrote in the study, released this month – a move that added more fuel to a firestorm surrounding the young CFPB.
The bureau has been hounded by Republicans this month, after employees alleged workplace discrimination against women and minorities. Long-time CFPB opponent, Represenative Sean Duffy (R-WI) condemned the agency as “out of control” in an op-ed piece published across a Wisconsin media chain.
“It is clear that the CFPB is a mega-agency in the mold of the National Security Agency, only with less accountability,” Duffy wrote.
But the Congressional inquiry into unchallenged discrimination accusations has been criticized as being motivated by some member’s political animus towards the CFPB. On Tuesday, a House Financial Services subcommittee hearing was scheduled to discuss the possibility of issuing subpoenas to compel CPFB employment managers to testify on the matter.