Candid on Credit
Payments, fees, interest, statements — what does it all stack up to? Kelly McNamara Corley ’82 provides a peek into the credit industry’s legal landscape.
Kelly McNamara Corley '82 is a problem solver. She believes barriers — legal, cultural, financial — can be overcome with persistence, discipline, fearlessness and humility. And she is exactly the type of leader the credit card industry needs today.
“As an extension of my company, I work to be vigilant and responsible about how we extend credit in this climate. I counsel with transparency about the issues facing our industry. I’m committed to finding equitable solutions and I’m sensitive to the fact that people get into financial trouble through no fault of their own sometimes, and we have an obligation to help them,” she said.
As a political science major in USC College, she learned to respect opposing perspectives and think analytically under pressure. The wider sphere of experience provided by her liberal arts education also prepared her to better understand the intricacies of law such as ethics and social responsibility.
Beginning her career as a lobbyist with Sears Roebuck & Co.’s government affairs office in Washington, D.C., McNamara Corley worked full-time while earning her law degree at George Mason University. After Sears was purchased by Dean Witter, Coldwell Banker and Allstate, she ran Dean Witter’s government affairs department before it merged with Morgan Stanley and she became head of global government affairs.
As general counsel for Discover Financial Services since 1999, she and her team are responsible for the company’s legal and regulatory matters, including litigation, bank regulation and intellectual property, to name a few. Each day she is challenged to be a leader who is fair, committed and compassionate.
Fascinated by the dynamic nature of law, she is also motivated by concerns about her daughter’s future. McNamara Corley strives to open more doors in the legal and business worlds for her and future generations of women.
How would you respond to those who blame the credit card industry for our culture of overspending?
That’s like suggesting that the auto industry is responsible for speeding. I also question whether it is a true cultural phenomenon or merely a perception. I think most Americans work hard to provide for their families, pay their bills on time and live responsible lives. Credit and lending is part of the backbone of our economy; it’s how we buy houses, open businesses and improve the quality of our daily lives. It all boils down to responsibility: responsible lending, responsible borrowing and allowing for contingencies.
As a result of the current economic downturn, how is the industry under greater scrutiny and what specific changes have been enacted? What new challenges are you facing?
New rules governing the credit card industry were announced in December 2008 by the Federal Reserve Board. They make the most far-reaching and comprehensive changes in the regulation of the credit card industry in more than 30 years. The rules enhance disclosures, highlight risks associated with use of the card and eliminate certain longstanding industry practices.
Many of these rules are consistent with our current practices. Discover is committed to fully complying with the new requirements; however, part of the industry’s challenge is to implement the changes by the Fed’s deadline of July 2010. With more than 1,600 pages of new rules, each issuer must change the products, processes, procedures, customer communications, job responsibilities, and technologies that support these changes.
We have begun putting new measures in place to enhance disclosures and to show the costs associated with credit and the risks that come with the misuse of credit. These entail highlighting borrowing costs — interest rates, fees, etc.: the consequences of only making minimum payments. We also provide consumers with a 45-day advance notice of change in terms of the account and a limitation on changing interest rates for existing balances.
In addition, Congress has taken an interest in the industry and is proposing its own changes to consumer protection and lending laws. It’s in our best interest — and that of most consumers who use credit responsibly — to make sure the legislation is fair and doesn’t create the effect of punishing all credit users because of the mistakes of a few.
How might regulation changes affect college students’ ability to obtain credit? Any advice?
Some of the proposed regulatory changes may make it more difficult for individuals with no credit history or a bad credit history to obtain credit. Lawmakers, universities, parents, students and the industry have an interest in ensuring that young adults use credit wisely and develop good credit histories. Credit availability is important in our economy and a good credit record is critically important to ensure you have credit when you need it and on good terms. College students should take advantage of the tremendous amount of consumer education out there. They also need to take the time to read the disclosure terms of their accounts and to ensure they comply with the terms of the account and avoid fees and charges. I also would advise them to talk to their parents about the subject and to ensure they use credit in conjunction with a sound budget plan.
Why is it important for consumers to understand their terms and disclosure statements?
It’s important for consumers to remember that costs and benefits of credit card usage depend on how each individual uses the card, and that credit cards are not all the same. Consumers who pay the full balance on time each month aren’t affected by the interest rate or late fees, so they can focus on other features, like rewards programs, annual fees, online payment and bill notification features, and customer service. Consumers who carry a balance on their cards need to be aware of the interest rate and the minimum payment. All of this information is disclosed in solicitation materials and account-opening disclosures, and on monthly statements. The Fed has just issued new regulations that should help to make the most important information even more readable and understandable.
What is the best way for consumers to understand their rights and the industry’s rights?
The most important information — fees, interest, when payments are due and how to dispute charges — is disclosed on each monthly statement, so consumers need to read these over rather than just mailing in minimum payments. Those who want detailed information about their accounts can find it in the account agreement that came with the card. This is the fine print everyone refers to, but you need to know it. If someone doesn’t understand any part of this agreement, he or she should call the credit card company and ask for an explanation. General information and advice about using credit cards is available online on at discover.com and from government sources such as the Fed and the FDIC as well as sites providing financial advice.
Where do you see industry regulations and laws headed?
Comprehensive new regulations that will further enhance disclosures and increase protections for consumers of financial services have been adopted and it is possible we may even see more changes. The industry does a lot to help consumers and I think much more can be done to communicate that value to policy makers. I believe it is essential that the industry, regulators and consumers maintain a strong working dialogue to ensure positive outcomes during this challenging time.
For example, Discover joined with other industry leaders last summer to develop Help With My Credit, a resource designed to increase awareness among consumers of the assistance available to them from credit card issuers. We did that not just in response to the economic environment, but because it’s our mission to help people spend smarter, manage debt better and save more.
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