Discover Financial Services reached a turning point in 2007, when Morgan Stanley spun off Discover as a stand-alone, publicly traded company. Leaders said the spin-off would “position both companies for continued success,” grow Discover’s credit card issuing business, and create long-term value through other endeavors. There was one problem: Discover needed to quickly build out its own treasury organization and structure.
Enter Mike Ebner. The corporate banking and finance expert trained at Northwestern University School of Law came to Discover in 2007, shortly after the spin-off from Morgan Stanley, to help solidify the infrastructure that would let the newly independent company thrive. When he arrived, Discover’s treasury group had just five people. “The bones were in place, but we needed to flesh it out very quickly to accomplish all that needed to happen,” Ebner recalls.
Ebner came with seven years of experience at Chicago law firms Chapman and Cutler and Goldberg Kohn, where he represented banks and finance companies in a variety of financings, primarily middle-market leveraged buyout transactions. As Discover’s director and senior counsel of corporate, banking, and finance, Ebner not only supported the finance and treasury departments but also managed corporate governance matters for Discover’s twenty-five legal entities and supported Discover’s acquisition transactions.
Everything went according to plan–until the 2008 financial crisis. Discover’s stock, which spun off from Morgan Stanley at $25 per share, dropped as low as $4. As borrowers braced for economic trouble, Discover faced rising delinquency rates and financial markets in turmoil.
In response, Ebner and his colleagues petitioned the Federal Reserve to become a bank holding company eligible for financial assistance under the US Treasury’s Troubled Asset Relief Program (TARP). The Fed agreed, giving Discover access to $1.225 billion in TARP funds. While the move helped Discover weather the economic downturn, it also brought increased regulatory oversight from the Federal Reserve and the Consumer Financial Protection Bureau—created under the related Dodd–Frank Act— in addition to Discover’s primary regulator, the Federal Deposit Insurance Corporation (FDIC).
Following the crisis, Ebner, who had mastered the ins and outs of Discover’s corporate structure and intercompany arrangements, was selected to lead Discover’s preparation of annual regulatory resolution plans under Dodd-Frank for both Discover Financial Services and Discover Bank to the Federal Reserve and FDIC. The initial plan prepared for the parent company—which described Discover’s legal entities and core business lines and how regulators could resolve the company in the event of an unexpected insolvency—totaled a thousand-plus pages.
Ebner met with dozens of leaders across Discover’s business lines to compile his research. Completing the resolution plans made him a much stronger in-house lawyer and increased his appreciation for Discover’s inner workings. “A corporate attorney at a big company has to be able to connect the dots across the entire enterprise. Nothing the business does happens in a vacuum,” he explains.
Discover has grown considerably in the years since. First, Ebner was lead internal counsel on Discover’s acquisition of $1 billion in deposit accounts from E*Trade Bank, which helped propel Discover’s online deposits business. He next assisted with Discover’s acquisition of Diners Club International for $165 million. That move allowed Discover to take its North American payments system global.
In 2010, he played an integral role in Discover’s purchase of the Student Loan Corporation and several student loan portfolios from Citigroup, doubling Discover’s student loan business. These acquisitions jump-started company growth coming out of the financial crisis.
“A corporate attorney at a big company has to be able to connect the dots across the entire enterprise. Nothing the business does happens in a vacuum.”
Though Ebner enjoyed his time as a firm lawyer, he feels at home in a corporate role. “It’s rewarding to help Discover use various financing mechanisms and corporate structures to fund the company and create new business lines, and I love seeing the impact of the work I do as an in-house lawyer,” he says. Ebner handles Discover’s multibillion-dollar credit card securitization program and other debt offerings, supports the Discover Bank board of directors, and manages corporate governance for Discover’s subsidiary group, including six international legal entities.
The results came as Ebner demonstrated his willingness to learn and grow along with the company. He says other lawyers with in-house aspirations should do the same. “Everyone is tempted to settle into a comfort zone, but varied experience will always help you develop your acumen, better understand the business, and make you more valuable to the company.”
Today, Discover is a recognized financial services leader, with more than fifteen thousand employees and $11.5 billion in revenue in 2019. While the brand may be best known for the Discover Card, North America’s third most popular credit card, it currently has more than $60 billion in online deposits and offers direct banking services, personal loans, student loans, and home equity loans.
Ebner has seen the company grow by all metrics. When he started in 2007, Discover had $35 billion in assets. As of 2020, the company has more than $120 billion. The once five-person treasury team now numbers more than fifty. Less than fifteen years after spinning off from Morgan Stanley, Discover Financial is an independent powerhouse with a future that is brighter than ever.
Mayer Brown LLP:
“Mike consistently demonstrates commitment. He’s been a terrific leader on the legal side of Discover’s securitization program.”
–Jan Stewart, Partner