Rep. Randy Neugebauer (R-TX), who chairs the House Subcommittee on Oversight and Investigations in the House Financial Services committee, writes up a hatchet job on the Consumer Financial Protection Bureau in today’s Wall Street Journal. He’s really concerned about the CFPB’s salary structure:
Pursuant to the Dodd-Frank Act, the bureau’s director may set and adjust employee pay to be comparable to the compensation and benefits provided by the Fed. This means the bureau’s employees are paid outside of the traditional government scale.
A review of the bureau’s salaries as of Aug. 28, 2012, reveals that approximately 60% of its 958 employees make more than $100,000 a year. Five percent of its employees are out-earning U.S. cabinet secretaries by raking in $200,000 or more annually. The director’s secretary alone is paid $165,139 a year.
I look at hardworking Americans—who make a median annual salary of $50,054—and I wonder: Why is it necessary for a government agency, let alone one that was created to assist and protect consumers, to pay the majority of its employees six-figure salaries?
Neugebauer’s real beef is that Congress doesn’t control of the CFPB’s budget, which comes out of the Federal Reserve. This is actually a frivolous and revealing complaint. CFPB still is subject to fairly rigorous GAO oversight and the agency has passed all audits. Furthermore, Arthur Wilmarth of George Washington University Law School has explained that CFPB’s structure is no different from other federal agencies in the financial regulatory sphere, like the Federal Housing Finance Agency and the Office of the Comptroller of the Currency. Those agencies do not have micromanaged budgets approved by Congress. In fact, with FHFA Republicans wanted an independent budget structure so that it would not be subject to undermining…. by Congress. The clear goal of Neugebauer and his Republican allies is to control and intimidate CFPB through the power of the purse. Neugebauer is asking for powers over CFPB that Congress holds over few other agencies, if any, especially considering the objections to staff salaries.
Turning to those, I would say that this is actually among the smarter things that CFPB has done. One of the major problems with the financial regulatory apparatus is the simple fact that regulators can make much more on Wall Street than they ever could make regulating it. The agencies cannot afford top talent, and so you have people of middling quality trying to police the best and the brightest in the world, paid top dollar for their services on Wall Street. So the proper comparison is not to the median income earner, but to the average financial executive on Wall Street. Closing that gap is desirable.
CFPB’s funding structure allows them to step outside these constraints and actually pay for talent. Maybe we won’t see as much turnover as we do at other agencies as a result. Maybe we’ll get less of a revolving door. Maybe people will get fairly compensated for work protecting the American people rather than over-compensated for ripping them off.
Salaries are really a blip in the larger budgetary scheme of things. Neugebauer gives the game away when he criticizes the CFPB for providing “consumer information in 187 languages (including Tamil and Somali).” He doesn’t want a functional, full-service agency protecting consumers. It’s just too “costly” to him. Or more to the point, it’s spending its money on the wrong priorities.