NCPA - National Center for Policy Analysis

Banking Salaries: Public Versus Private

April 30, 2014

If you want to make money in banking, become a federal regulator, writes Paul Kupiec, resident scholar at the American Enterprise Institute.

Federal banking regulatory agency compensation, on average, is more than 2.7 times that of private-sector bank employees, and excessive compensation costs are ultimately passed on to bank shareholders and customers.

  • In 2012, the average yearly compensation for a bank employee in the United States was $69,266, including bonuses and benefits. The average bank employee salary that year was $49,540, very close to the national average across all jobs of $45,790.
  • Employees at the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), the Consumer Financial Protection Board (CFPB), and the Federal Reserve System earned an average total compensation higher than that earned by employees at 99.9 percent of all banks in 2012.
  • Prior to the Dodd-Frank Act, the average compensation per employee at the OCC and FDIC was 2.3 times the average compensation of a private-sector banking employee. Today, that figure has risen to more than 2.7.
  • In 2012, almost 19 percent of CFPB and OCC employees earned more than $180,000 per year, and 68 percent of employees at the FDIC and CFPB earned more than $100,000 per year.
  • In the CFPB, OCC and FDIC, less than 7 percent of employees earned less than $50,000 in 2012, the year that the average bank employee salary was $49,540.

Studies often indicate that federal government workers earn a premium over an equivalent private-sector job. In a recent Congressional Budget Office study, researchers concluded that the average total compensation for government employees was 16 percent higher than in the private sector, though the premium varied depending on education and experience.

President George H. W. Bush signed the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) in 1989, giving federal banking regulatory agencies authority over their own compensation, without requiring approval of the Office of Personal Management. The idea was that such flexibility would allow banking agencies to attract talent and experienced supervisors. Instead, these agencies have increased the government salary premiums of most of their employees, with the premiums actually highest in the jobs that require little education or experience.

The Federal Reserve does not release its employee compensation data.

Source: Paul H. Kupiec, "The Money In Banking: Comparing Salaries of Bank and Bank Regulatory Employees," American Enterprise Institute, April 22, 2014.


Browse more articles on Economic Issues