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Dive Brief:
- Card company Discover Financial Services has added a former Federal Deposit Insurance Corporation regional director to its board, the company said Tuesday.
- With the appointment of Kathy “Moe” Lonowski to the company’s board of directors and its subsidiary, Discover Bank, effective Tuesday, the board increased its size to 13 members, according to a filing with the Securities and Exchange Commission. Lonowski was also named to the board’s risk oversight committee.
- Lonowski most recently served as the regional director of the FDIC’s San Francisco region, Discover said in a news release. Prior to that, she’d held other roles at the federal agency, including as a field supervisor of risk management supervision.
Dive Insight:
The appointment of Lonowski, who has 38 years of bank regulatory experience, comes as Riverwoods, Illinois-based Discover strives to boost its compliance efforts.
Last month, former CEO Roger Hochschild abruptly left his post, and Discover board member John B. Owen, a former banking executive, was named interim CEO. Hochschild’s exit came one month after the company said it received a proposed consent order from the FDIC in connection with consumer compliance.
That same day, Discover also disclosed a merchant acquiring pricing error unrelated to the FDIC probe. That issue was discovered internally and also pointed to deficiencies in the company’s corporate governance and risk management, executives said during the company’s second-quarter earnings call in July. An internal investigation into that issue is nearing an end, Greene said last month.
Discover also received consent orders from the Consumer Financial Protection Bureau, in 2015 and 2020, related to the company’s student loan servicing practices.
Owen has committed to bolstering risk and compliance efforts at Discover, and said one of his top goals includes the continued build-out of the company’s compliance management system. After historically under-investing in compliance, Discover has increased risk and compliance spending by about $300 million since 2019, CFO John Greene said during an August business update.
“Kathy’s knowledge and depth of experience gained during her tenure with the FDIC make her an excellent addition to our Board,” Tom Maheras, Discover’s board chairman, said in the release. “With compliance being a top priority at Discover, Kathy’s expertise with regulatory issues and understanding of the financial services industry will help make the company more effective in managing risk.”
J. Michael Shepherd was appointed to Discover’s board in August when Hochschild departed. Shepherd, an attorney and former BancWest CEO, also serves on the board’s risk oversight committee.
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