H. Rept. 113-349 - 113th Congress (2013-2014)
February 10, 2014, As Reported by the Financial Services Committee

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House Report 113-349 - CFPB PAY FAIRNESS ACT OF 2013




[House Report 113-349]
[From the U.S. Government Publishing Office]


113th Congress                                            Rept. 113-349
                        HOUSE OF REPRESENTATIVES
 2d Session                                                      Part 1

======================================================================



 
                     CFPB PAY FAIRNESS ACT OF 2013

                                _______
                                

 February 10, 2014.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

Mr. Hensarling, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 2385]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 2385) to amend the Dodd-Frank Wall Street Reform 
and Consumer Protection Act to set the rate of pay for 
employees of the Bureau of Consumer Financial Protection in 
accordance with the General Schedule, having considered the 
same, report favorably thereon without amendment and recommend 
that the bill do pass.

                          Purpose and Summary

    H.R. 2385, the CFPB Pay Fairness Act of 2013, amends the 
Dodd-Frank Wall Street Reform and Consumer Protection Act (the 
``Dodd-Frank Act'') to require the Consumer Financial 
Protection Bureau (CFPB) to pay its employees according to the 
General Schedule set forth in section 5332 of title 5 of the 
United States Code.

                  Background and Need for Legislation

    Under current law, the rates of basic pay for CFPB 
employees are set and adjusted by the Director of the CFPB. 
Compensation (including benefits) for classes of employees must 
be comparable to the compensation and benefits being provided 
by the Board of Governors of the Federal Reserve System for 
corresponding classes of employees.
    As of September 30, 2013, the CFPB had 1,335 employees and 
spent $190.2 million on employee salaries and benefits, 
according to the Fiscal Year 2013 Financial Report of the 
Consumer Financial Protection Bureau.\1\
---------------------------------------------------------------------------
    \1\Fiscal Year 2013 Financial Report of the Consumer Financial 
Protection Bureau (Dec. 11, 2013) http://files.consumerfinance.gov/f/
201312_cfpb_report_financial-report.pdf.
---------------------------------------------------------------------------
    Based on the foregoing numbers and report, the CFPB pays 
its employees an average of $142,000 per employee, or 3.3 times 
the mean per capita personal income in the United States 
($43,000). According to a July 2013 article in the Washington 
Examiner:
    ``Six-figure salaries go to 741 employees . . .
    Fifty-six CFPB officers earn more than all presidential 
cabinet secretaries who earn $199,500.
    There are 173 agency staff who earn more than all elected 
Members of Congress and 209 employees who earn more than all 50 
U.S. governors. . . .
    Fourteen agency staffers are paid more than Vice President 
Biden who earns $227,000.
    Nineteen CPFB staffers earn more than Speaker of the House 
John Boehner, who is third in line for succession to the 
presidency and is paid $223,500.
    Thirty-seven CFPB employees get more than eight Supreme 
Court justices, who are paid $213,500. Nineteen CFPB staffers 
make more than Chief Justice John Roberts who gets $223,500.
    Top White House salaries are capped at $172,200, but 181 
employees are paid more than the president's chief of staff, 
senior counsel and press secretary.''\2\
---------------------------------------------------------------------------
    \2\Richard Pollock, ``Fat paychecks for CFPB officials, hundreds 
paid more than Fed Chairman, congressmen, Supreme Court justices,'' 
Washington Examiner (July 18, 2013), available at http://
washingtonexaminer.com/fat-paychecks-for-cfpb-officials-hundreds-paid-
more-than-fed-chairman-congressmen-supreme-court-justices/article/
2533189.
---------------------------------------------------------------------------
    H.R. 2385 curbs these excessive salaries by requiring CFPB 
to follow the salary schedule used by most agencies in the 
Federal government.

                                Hearings

    The Committee on Financial Services' Subcommittee on 
Financial Institutions and Consumer Credit held a hearing on 
H.R. 2385 on October 29, 2013. The Subcommittee on Oversight 
and Investigations held a hearing on the CFPB's budget 
generally on June 18, 2013.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
November 20, 2013, and ordered H.R. 2385 to be reported 
favorably to the House without amendment by a recorded vote of 
31 yeas to 23 nays (recorded vote no. FC-41), a quorum being 
present.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto.
    1. A motion by Chairman Hensarling to report the bill (H.R. 
2385) without amendment to the House with a favorable 
recommendation was agreed to by a record vote of 31 yeas to 23 
nays (recorded vote no. FC-41).

                                              RECORD VOTE NO. FC-41
----------------------------------------------------------------------------------------------------------------
         Representative             Yea       Nay     Present     Representative      Yea       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Hensarling.................        X   ........  .........  Ms. Waters.......  ........        X   .........
Mr. Bachus.....................        X   ........  .........  Mrs. Maloney (NY)  ........        X   .........
Mr. King (NY)..................        X   ........  .........  Ms. Velazquez....  ........        X   .........
Mr. Royce......................        X   ........  .........  Mr. Watt.........  ........        X   .........
Mr. Lucas......................        X   ........  .........  Mr. Sherman......  ........        X   .........
Mr. Gary G. Miller (CA)........        X   ........  .........  Mr. Meeks........  ........        X   .........
Mrs. Capito....................        X   ........  .........  Mr. Capuano......  ........        X   .........
Mr. Garrett....................        X   ........  .........  Mr. Hinojosa.....  ........        X   .........
Mr. Neugebauer.................        X   ........  .........  Mr. Clay.........  ........  ........  .........
Mr. McHenry....................        X   ........  .........  Mrs. McCarthy      ........  ........  .........
                                                                 (NY).
Mr. Campbell...................  ........  ........  .........  Mr. Lynch........  ........        X   .........
Mrs. Bachmann..................        X   ........  .........  Mr. David Scott    ........        X   .........
                                                                 (GA).
Mr. McCarthy (CA)..............        X   ........  .........  Mr. Al Green (TX)  ........        X   .........
Mr. Pearce.....................        X   ........  .........  Mr. Cleaver......  ........        X   .........
Mr. Posey......................  ........  ........  .........  Ms. Moore........  ........        X   .........
Mr. Fitzpatrick................        X   ........  .........  Mr. Ellison......  ........        X   .........
Mr. Westmoreland...............        X   ........  .........  Mr. Perlmutter...  ........  ........  .........
Mr. Luetkemeyer................        X   ........  .........  Mr. Himes........  ........        X   .........
Mr. Huizenga (MI)..............        X   ........  .........  Mr. Peters (MI)..  ........        X   .........
Mr. Duffy......................        X   ........  .........  Mr. Carney.......  ........        X   .........
Mr. Hurt.......................        X   ........  .........  Ms. Sewell (AL)..  ........        X   .........
Mr. Grimm......................        X   ........  .........  Mr. Foster.......  ........        X   .........
Mr. Stivers....................        X   ........  .........  Mr. Kildee.......  ........  ........  .........
Mr. Fincher....................        X   ........  .........  Mr. Murphy (FL)..  ........        X   .........
Mr. Stutzman...................        X   ........  .........  Mr. Delaney......  ........        X   .........
Mr. Mulvaney...................        X   ........  .........  Ms. Sinema.......  ........        X   .........
Mr. Hultgren...................        X   ........  .........  Mrs. Beatty......  ........        X   .........
Mr. Ross.......................        X   ........  .........  Mr. Heck (WA)....  ........        X   .........
Mr. Pittenger..................        X   ........  .........
Mrs. Wagner....................        X   ........  .........
Mr. Barr.......................        X   ........  .........
Mr. Cotton.....................        X   ........  .........
Mr. Rothfus....................        X   ........  .........
----------------------------------------------------------------------------------------------------------------

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee has held hearings and 
made findings that are reflected in this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee states that H.R. 2385 
requires the CFPB to pay its employees according to the General 
Schedule.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                 Congressional Budget Office Estimates

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, February 7, 2014.
Hon. Jeb Hensarling,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2385, the CFPB Pay 
Fairness Act of 2013.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Susan Willie.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

H.R. 2385--CFPB Pay Fairness Act of 2013

    Summary: H.R. 2385 would set basic compensation rates for 
employees of the Bureau of Consumer Financial Protection (CFPB) 
according to the General Schedule (GS) for federal employees. 
Under current law, pay rates at the CFPB are comparable to 
rates paid to employees of the Federal Reserve System in 
corresponding job classes.
    CBO estimates that enacting H.R. 2385 would reduce direct 
spending by $280 million over the 2014-2024 period; therefore, 
pay-as-you-go procedures apply. CBO estimates that enacting 
H.R. 2385 would not affect revenues, and implementing the bill 
would not affect spending subject to appropriation.
    H.R. 2385 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 2385 is shown in the following table. 
The costs of this legislation fall within budget function 370 
(commerce and housing credit).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              By fiscal year, in millions of dollars--
                                           -------------------------------------------------------------------------------------------------------------
                                             2014    2015    2016    2017    2018    2019    2020    2021    2022    2023    2024   2014-2019  2014-2024
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPENDING

Estimated Budget Authority................       0     -25     -26     -27     -27     -28     -29     -30     -30     -31     -32      -133       -285
Estimated Outlays.........................       0     -21     -26     -27     -27     -28     -29     -30     -30     -31     -32      -130      -280
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Components may not sum to totals because of rounding.

    Basis of estimate: For this estimate, CBO assumes that the 
bill will be enacted near the middle of fiscal year 2014, that 
its provisions will become effective at the start of fiscal 
year 2015, and that spending will follow historical patterns 
for the CFPB. The CFPB is permanently authorized to spend 
amounts transferred from the Federal Reserve; because that 
activity is not subject to appropriation, CFPB expenditures are 
recorded in the budget as direct spending. CBO estimates that 
enacting the provisions of H.R. 2385 would reduce direct 
spending by installing a new salary schedule at the CFPB with 
lower rates at every pay grade.
    When the CFPB was established in 2010, employee 
compensation rates were set based on the salary structure then 
in place at the Federal Reserve System for corresponding 
classes of employees. The CFPB compensation system is made up 
of 17 pay bands that can be compared with the General Schedule. 
At the start of fiscal year 2014, the bureau employed about 
1,375 individuals at salaries ranging from an average of about 
$31,000 in the lowest pay band to an average of almost $250,000 
in the highest pay band; the average annual salary for all 
bureau employees was approximately $116,000. For 2014, average 
GS salaries range from about $25,000 in the lowest pay band to 
about $143,000 per year in the highest pay band.
    For this estimate, CBO assumes that the bureau would make 
the necessary changes in the pay structure to ensure that each 
employee is paid at the appropriate GS rate for the work that 
employee performs. Without detailed information about the 
distribution of salaries within each pay band, we compared the 
average salary in each pay band of the bureau with the average 
salary for the comparable GS pay band to determine the average 
difference in annual salary at each level. That calculation 
shows that there is about a 13 percent difference between the 
salaries under the two compensation systems.
    Based on information provided in annual budget reports of 
the CFPB, CBO estimates that about 33 percent of the bureau's 
total obligations represent employee compensation, or almost 
$200 million per year, on average, over the 2014-2024 period.
    CBO estimates that enacting H.R. 2385 would reduce direct 
spending by about $30 million per year, or $280 million over 
the 2014-2024 period, reflecting lower salary rates under the 
General Schedule as well as lower costs for employee retirement 
benefits that are based on salary levels. Savings in future 
years would increase as total employee compensation costs for 
the bureau are expected to grow.
    Those savings could be lower depending on, for example, how 
employees respond to the pay rate differences, whether the 
agency changes the amount of work performed by employees and 
private contractors, or whether the agency increases other 
sources of compensation such as bonuses. CBO has no information 
indicating whether those or similar actions would be taken by 
the bureau, and therefore has no basis for determining the 
magnitude of such effects. We expect that implementing the new 
pay structure would take several months; therefore, savings 
would not start until 2015.
    Pay-As-You-Go Considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. The net changes in outlays that are subject to those 
pay-as-you-go procedures are shown in the following table.

       CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 2385, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON FINANCIAL SERVICES ON NOVEMBER 21, 2013
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              By fiscal year, in millions of dollars--
                                           -------------------------------------------------------------------------------------------------------------
                                             2014    2015    2016    2017    2018    2019    2020    2021    2022    2023    2024   2014-2019  2014-2024
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               NET DECREASE IN THE DEFICIT

Statutory Pay-As-You-Go Impact............       0     -21     -26     -27     -27     -28     -29     -30     -30     -31     -32      -130      -280
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Components may not sum to totals because of rounding.

    Intergovernmental and private-sector impact: H.R. 2385 
contains no intergovernmental or private-sector mandates as 
defined UMRA.
    Estimate prepared by: Federal costs: Susan Willie; Impact 
on state, local, and tribal governments: Melissa Merrell; 
Impact on the private sector: Paige Piper/Bach.
    Estimate approved by: Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of the section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    H.R. 2385 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

                    Duplication of Federal Programs

    Pursuant to section 3(j) of H. Res. 5, 113th Cong. (2013), 
the Committee states that no provision of H.R. 2385 establishes 
or reauthorizes a program of the Federal Government known to be 
duplicative of another Federal program, a program that was 
included in any report from the Government Accountability 
Office to Congress pursuant to section 21 of Public Law 111-
139, or a program related to a program identified in the most 
recent Catalog of Federal Domestic Assistance.

                   Disclosure of Directed Rulemaking

    Pursuant to section 3(k) of H. Res. 5, 113th Cong. (2013), 
the Committee states that H.R. 2385 does not direct any 
rulemaking.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This section cites H.R. 2385 as the ``CFPB Pay Fairness Act 
of 2013.''

Section 2. Rate of pay for employees of the Bureau of Consumer 
        Financial Protection

    This section requires the CFPB to pay its employees 
according to the General Schedule set forth in section 5332 of 
title 5, United States Code. The section states that the pay 
rate change shall apply to service by an employee of the CFPB 
following the 90-day period after enactment.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

DODD-FRANK WALL STREET REFORM AND CONSUMER PROTECTION ACT

           *       *       *       *       *       *       *



TITLE X--BUREAU OF CONSUMER FINANCIAL PROTECTION

           *       *       *       *       *       *       *


Subtitle A--Bureau of Consumer Financial Protection

           *       *       *       *       *       *       *


SEC. 1013. ADMINISTRATION.

  (a) Personnel.--
          (1) * * *
          [(2) Compensation.--Notwithstanding any otherwise 
        applicable provision of title 5, United States Code, 
        concerning compensation, including the provisions of 
        chapter 51 and chapter 53, the following provisions 
        shall apply with respect to employees of the Bureau:
                  [(A) The rates of basic pay for all employees 
                of the Bureau may be set and adjusted by the 
                Director.
                  [(B) The Director shall at all times provide 
                compensation (including benefits) to each class 
                of employees that, at a minimum, are comparable 
                to the compensation and benefits then being 
                provided by the Board of Governors for the 
                corresponding class of employees.
                  [(C) All such employees shall be compensated 
                (including benefits) on terms and conditions 
                that are consistent with the terms and 
                conditions set forth in section 11(l) of the 
                Federal Reserve Act (12 U.S.C. 248(l)).]
          (2) Compensation.--The rates of basic pay for all 
        employees of the Bureau shall be set and adjusted by 
        the Director in accordance with the General Schedule 
        set forth in section 5332 of title 5, United States 
        Code.

           *       *       *       *       *       *       *


 Waiver of Consideration by the Committee on Oversight and Government 
                                Reform 
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>


                             MINORITY VIEWS

    By tying compensation for employees of the Consumer 
Financial Protection Bureau (CFPB or Bureau) to the General 
Schedule for federal employees and eliminating the requirement 
for the Bureau to provide employees with benefits and 
compensation that are comparable to the corresponding class of 
Federal Reserve employees, the bill undermines the Bureau's 
ability to hire and retain qualified staff who may otherwise 
seek employment at another financial regulator or within the 
private sector. We note that all other financial regulators, 
including the Farm Credit Administration (FCA), Federal Housing 
Finance Agency (FHFA), Federal Deposit Insurance Corporation 
(FDIC), Federal Reserve (FRB), Commodity Futures Trading 
Commission (CFTC), Securities and Exchange Commission (SEC), 
National Credit Union Administration (NCUA) and the Office of 
the Comptroller of the Currency (OCC), are all able to offer 
more competitive compensation packages than those provided 
under the General Schedule.
    Consumer protection is a critical element of financial 
regulation, and we believe the CFPB should have the same 
flexibility to set employee compensation and benefits as other 
financial regulators. As a matter of fact, the CFPB is required 
under the Financial Institutions Reform, Recovery and 
Enforcement Act (FIRREA) to offer compensation that is 
comparable to and consistent with other financial regulators, 
which would be impossible under the General Schedule.
    In addition to competing with other federal agencies, the 
Bureau must compete for staff with the financial services 
industry, which is willing to pay a premium for professionals 
with the expertise and skills necessary to perform complicated 
regulatory analysis. Reducing the Bureau's ability to 
compensate staff appropriately would make it harder for the 
CFPB to attract and retain the qualified, experienced staff 
that is needed to ensure the use of CFPB's supervisory, 
enforcement and rulemaking authority is balanced and 
appropriate.
                                   Maxine Waters.
                                   Keith Ellison.
                                   David Scott.
                                   Stephen F. Lynch.
                                   Michael E. Capuano.
                                   Kyrsten Sinema.
                                   Carolyn B. Maloney.
                                   Bill Foster.
                                   Joyce Beatty.
                                   Al Green.
                                   Daniel Kildee.
                                   Denny Heck.
                                   James A. Himes.
                                   John Carney.
                                   Gregory W. Meeks.
                                   Gwen Moore.
                                   Terri Sewell.
                                   Wm. Lacy Clay.
                                   Patrick Murphy.
                                   Ed Perlmutter.
                                   Ruben Hinojosa.
                                   Brad Sherman.
                                   Emanuel Cleaver.