Guess Who Makes More Than Bankers: Their Regulators

[Adam]

Guess Who Makes More Than Bankers: Their Regulators

In 2012 at the Federal Deposit Insurance Corp. the average pay was $190,000. At the Federal Reserve? It won't say.

Long before George Bailey wrestled with Mr. Potter in "It's a Wonderful Life," the public decried the pay of top executives in large financial institutions. Overpaid bank executives are the villains in regulatory morality tales and feed distorted public perceptions about bankers' pay.

It is true that the very top bank executives make more in a year than most of us make in a lifetime, but compensation of this magnitude is rare. Most banks in this country are small businesses and pay employees modest salaries. The Bureau of Labor Statistics reports that the average annual salary of a bank employee was $49,540 in 2012, not much higher than the average annual across all occupations, $45,790.

Yet one group in banking stands out as highly paid—federal bank regulators. Before the Dodd-Frank Act, the average employee of a federal bank regulatory agency received 2.3 times the average compensation of a private banker. By 2013 this ratio increased to more than 2.7—and in some cases considerably more.

The average compensation at the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corp. (FDIC) and the Consumer Financial Protection Bureau (CFPB) exceeded $190,000 in 2012. The staff at the Federal Reserve is likely even better compensated, but the Fed refuses to release employee salaries.

You might think high-paying jobs at these agencies require special skills. Not so. At the OCC, secretaries make on average $79,182 per annum. Motor vehicle operators (the agency's limo drivers) at the FDIC earn $82,130. Human resources management trainees at the CFPB make $110,759 a year.

So, it turns out those evil 1%ers that the Left loves to hate so much are actually the very people that they laud as ... keeping the so-called 1% in line.

How about that.

[Billy Jingo]

The Rebuttal

Are Bank Regulators Overpaid?


Hahahahahahahahahahaha no come on that is so dumb I can't believe you even asked. Oh you didn't, that's right, Paul Kupiec did, in a Wall Street Journal op-ed. Kupiec, an American Enterprise Institute resident scholar and apparently disgruntled former banking regulator, has this to say:

It is true that the very top bank executives make more in a year than most of us make in a lifetime, but compensation of this magnitude is rare. Most banks in this country are small businesses and pay employees modest salaries. The Bureau of Labor Statistics reports that the average annual salary of a bank employee was $49,540 in 2012, not much higher than the average annual across all occupations, $45,790.

Yet one group in banking stands out as highly paid — federal bank regulators. Before the Dodd-Frank Act, the average employee of a federal bank regulatory agency received 2.3 times the average compensation of a private banker. By 2013 this ratio increased to more than 2.7 — and in some cases considerably more

The average compensation at the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corp. (FDIC) and the Consumer Financial Protection Bureau (CFPB) exceeded $190,000 in 2012. The staff at the Federal Reserve is likely even better compensated, but the Fed refuses to release employee salaries..

One group in banking stands out as highly paid! One group! FYI, the OCC has 3,898 full-time-equivalent employees, the FDIC has 7,199, the CFPB has 1,545, and the Fed has 21,311.1 That's a total of 33,953 employees of all the bank regulatory agencies, making their $190,000 salaries like entitled fat cats. As it happens, that one group is roughly the size of Goldman Sachs, whose 32,900 employees make an average of $383,000 a year. So, two groups in banking stand out as highly paid! Regulators and Goldman. Oh but Morgan Stanley's 55,794 employees average $291,000 each. Three groups! I'll stop there, though it's pretty easy to find groups that make more than the regulators. ("Securities industry employees in New York" is a good one.)

Especially since that $190,000 number seems ... wrong? These agencies release budgets, you know, even the sneaky sneaky Fed. Here are some average salaries computed from the budgets:



So the average federal financial regulator makes somewhat less than a third-year investment banking analyst.

Yes, fine, the average regulator makes more than the average employee of a small-business bank that pays its employees modest salaries, but that's not where they spend their time. We have a big sophisticated banking system, and we want big sophisticated regulators to regulate it. If you set regulatory compensation to compete with teller jobs at Bob's Bank and Tackle Store, you'll be able to hire away Bob's tellers, and I suppose they will have some useful insights into regulating small-business banks. (Will they? Why?) But what will they do with the London Whale?

...

[Adam]

The Rebuttal

Thus proving that Matt Levine is either illiterate or just plain stupid. Or he's just so used to lying that he can't help himself any more.


"As it happens, that one group is roughly the size of Goldman Sachs, whose 32,900 employees make an average of $383,000 a year. So, two groups in banking stand out as highly paid! Regulators and Goldman. Oh but Morgan Stanley's 55,794 employees average $291,000 each. Three groups!"

"It is true that the very top bank executives make more in a year than most of us make in a lifetime, but compensation of this magnitude is rare. Most banks in this country are small businesses and pay employees modest salaries. The Bureau of Labor Statistics reports that the average annual salary of a bank employee was $49,540 in 2012, not much higher than the average annual across all occupations, $45,790.

[Billy Jingo]

Thus proving that Matt Levine is either illiterate or just plain stupid. Or he's just so used to lying that he can't help himself any more.


"As it happens, that one group is roughly the size of Goldman Sachs, whose 32,900 employees make an average of $383,000 a year. So, two groups in banking stand out as highly paid! Regulators and Goldman. Oh but Morgan Stanley's 55,794 employees average $291,000 each. Three groups!"

"It is true that the very top bank executives make more in a year than most of us make in a lifetime, but compensation of this magnitude is rare. Most banks in this country are small businesses and pay employees modest salaries. The Bureau of Labor Statistics reports that the average annual salary of a bank employee was $49,540 in 2012, not much higher than the average annual across all occupations, $45,790.

*shrug*

Is a minimum wage + teller at the Del Rio Bank of Cantalope Growers really a banker?

I am inclined to think the OP is deception and propaganda.

[Norm dePlume]

So to get to the $49K figure that the WSJ op/ed waves around, they're including lots of drive-up tellers and telephone support line operators in the group they call "bankers." That is ridiculous spin.

That aside, there is good reason for paying regulators something in the neighborhood of the people they regulate.

In 1998 the government established a financial regulatory agency outside of the central bank, the FME. Its mandate matched European standards for financial regulation, and its website made it look fully professional. But it had a staff of little more than 30 by the early 2000s, housed in decrepit offices tucked away behind a fast-food joint. The high-powered financiers and lawyers of the banks were scornfully dismissive when called for meetings there. This was the emasculation tactic in action.

By 2006 staff numbers had risen to 46 for supervising three of the world’s 300 biggest banks. Staff turnover was well into double digits, as staff walked across the street to join a bank and multiply their salary. With this prospect in mind, they had already been captured before they left the regulator.