Sen. Elizabeth Warren, D-Mass., is sounding the alarm about the Trump administration’s approval of a new bank backed by two GOP megadonors, tech billionaires Peter Thiel and Palmer Luckey.
The two men previously launched companies that are deeply intertwined with Donald Trump’s agenda. Thiel co-founded Palantir, the software company that has received billions of dollars in military contracts from the Trump administration, and Luckey founded Anduril, which has signed a multibillion-dollar deal to develop military tools for the federal government.
On Wednesday, the Treasury Department’s Office of the Comptroller of the Currency announced that Erebor Bank, the “Lord of the Rings”-named bank co-founded by Luckey and backed in part by Thiel’s venture capital fund, has received conditional approval for a national bank charter. The approval is contingent upon the bank’s applying for stock in a Federal Reserve bank and obtaining deposit insurance from the Federal Deposit Insurance Corporation.
In July, the Financial Times described the bank’s mission as one designed to “take over the niche” previously occupied by the now-shuttered Silicon Valley Bank as the “go-to lender for riskier companies and cryptocurrency players that traditional banks might reject.” Per the FT:
Its target market would be businesses that were part of the US “innovation economy,” in particular tech companies focused on virtual currencies, artificial intelligence, defence and manufacturing, the filing said. It would also serve individuals who work for or invest in these companies.
It also planned to work with non-US companies “seeking access to the US banking system.”
In theory, such a bank could prove beneficial to the Trump family, given its ongoing investments in cryptocurrencies. On that note, I wrote earlier this week about the Trump administration’s growing list of gifts to wealthy crypto enthusiasts, and I’d argue that the post — which you can read here — has taken on added relevance in light of the Erebor Bank announcement.
Warren, who has been outspoken about the Trump family’s potential conflicts of interest involving the crypto world since he retook office, cried foul over the bank approval. In a statement, she said:
President Trump’s billionaire buddies Peter Thiel and Palmer Luckey just received approval from the OCC to launch a new bank that will cater to the financial whims of Silicon Valley billionaires. In a free market, credit flows fairly to businesses because they can use the money productively, not to the President’s cronies because of their political connections. Trump’s financial regulators just fast tracked an approval of this risky venture that could set up another bailout funded by American taxpayers and destabilize our banking system.
Few people have benefited from Trump’s presidency quite like wealthy crypto bros who have hurled money his way. And Warren’s view seems quite clear: that this is hardly a coincidence.