The Office of the Comptroller of the Currency (OCC) has granted conditional approval to Erebor Bank for a national bank charter.
Erebor will be a full service insured national bank that plans to target its products and services to technology companies and ultra-high-net-worth individuals that utilize virtual currencies, the conditional approval letter stated. The bank intends to offer a variety of lending and deposit products and other related services.
The bank’s preliminary approval is subject to a number of conditions, including that Erebor maintain a minimum 12% Tier 1 leverage ratio.
“Erebor is the first de novo bank to receive a preliminary conditional approval since I arrived at the OCC. I am committed to a dynamic and diverse federal banking system, and our decision today is a first but important step in living up to that commitment,” Comptroller of the Currency Jonathan Gould said. “Today’s decision is also proof that the OCC under my leadership does not impose blanket barriers to banks that want to engage in digital asset activities. Permissible digital asset activities, like any other legally permissible banking activity, have a place in the federal banking system if conducted in a safe and sound manner. The OCC will continue to provide a path for innovative approaches to financial services to ensure a strong, diverse financial system that remains relevant over time.”
The Columbus, Ohio-based bank is backed by tech investors Peter Thiel, Palmer Luckey, and Joe Lonsdale.
The federal banking system includes more than 1,000 national banks, federal savings associations, and federal branches of foreign banking organizations operating in the United States. They range in size from 1,000 smaller community banks under $30 billion in assets to the largest internationally active banks. The institutions that make up the federal banking system conduct approximately 67 percent of the banking activity in the United States, hold more than $16 trillion in assets combined and manage more than $85 trillion under their custody and fiduciary control.
U.S. Sen. Elizabeth Warren (D-MA), ranking member of the Senate Committee on Banking, Housing, and Urban Affairs, expressed disapproval over the OCC’s action regarding the new bank.
“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,” Warren said. “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.”
Erebor still needs approval from the Federal Deposit Insurance Corporation.