As regulators continue to churn out Dodd-Frank rules four years after
its passage, Wall Street banks continue to tack on thousands of compliance
staff and spend billions to restructure.

JP Morgan CEO Jamie Dimon told employees that the bank had hired 4,000
employees for compliance since 2012. Citibank said in July they will
have 30,000 people working in
compliance by the end of the year, up 33% since 2011. HSBC said they
added 1,500 compliance staffers globally in the first half of 2014

Is this a Wall Street job boom? Not quite. The banks are spending on
compliance, but the jobs aren’t paid like Wall Street jobs, and they
aren’t necessarily in New York. The median wage for compliance
officers in NYC is $80,780, less than a quarter of the average Wall
Street salary.

There’s plenty of work to do. A March Reuters survey of bank
leadership said that in the
US, compliance teams were expected to spend almost twice as much time
tracking and analyzing regulatory developments in 2014 as they did in
2013. In that report, two thirds of executives surveyed said they
expected compliance costs to go up over 2014.

Compliance staff do not bring in capital like the traders they
monitor.  Expenses are up 1% from last year at the six biggest banks,
the Wall Street Journal reported in July, and up almost 10% between
2009 and 2013, while revenues were down by nearly the same amount.
That squeeze has resulted in cost-cutting campaigns at the big banks.

Dodd-Frank compliance has cost banks almost $22 billion, the American
Action Forum estimated in July. In 2012, Standard and Poor’s revised
their initial 2010 prediction, estimating that Dodd-Frank would reduce
big banks’ earnings by up to $34 billion annually.

The law’s mandate for banks to be simpler and more transparent mean
many compliance jobs are in information technology and process
management. Robert Sherman of HSBC said they “have been hiring the
best of the best people with regulatory, law enforcement and private
sector experience.”

HSBC confirmed that the majority of the staffers they added in
2014 were not based in New York. JP Morgan Chase declined to comment
on whether their compliance staffers were located in the city.

Work continues to balloon for consultants outside the banks as well.
Paul Lee of the law firm Debevoise & Plimpton’s financial institutions
group said that group had grown from five or six lawyers to twenty
since Dodd-Frank.

But the bigger job boon has been to financial regulators. While jobs
in the financial industry increased 2.9 percent since Dodd-Frank,
according to the American Action Forum, jobs at federal financial
regulatory agencies were up 16.2 percent.

Comments are closed.