If you want to open any kind of national bank in this country you have to get permission from the Office of the Comptroller of the Currency, or OCC. That includes opening a national trust bank, a sort-of quasi-commercial bank whose primary function is neither to accept deposits nor make loans. National trust banks exist to hold and manage assets. Increasingly these days, that means cryptocurrency. National trust banks used to be comparatively rare, and even today there are only about 60 in the whole country. Lately, however, OCC has been inundated with applications from crypto firms looking to charter in-house national trust banks so they don’t have to rely on outside banks to hold crypto assets on their behalf.
You’ve probably heard of one crypto company that applied for a national trust bank charter earlier this year. It’s called World Liberty Financial, or WLF, and the Trump family owns a 38 percent stake in it and collects 75 percent of all of its crypto revenue. The Trumps invested not a penny in this venture, nor is any family member employed there. Yet last year President Donald Trump collected nearly $600 million from WLF, according to his financial statement.
Half a trillion may seem like a lot to give a person, even a very famous one, for doing nothing, but on Friday Trump did WLF a solid. The person Trump appointed Comptroller of the Currency, Jonathan Gould, granted conditional approval to WLF’s application to create a national trust bank. The bank’s name will be the World Liberty Trust Company. Really, though, it will be the First National Bank of Trump.
It says a lot about the routinization of Trumpian kleptocracy that a mind-bendingly corrupt transaction like this is no longer considered a political story. It’s a business story, covered in the business press. Under Trump, crypto companies have been encouraged to apply for national trust bank charters. Gould opened the door a crack with a regulatory letter he sent as OCC general counsel during Trump’s first term. Last year’s GENIUS Act opened that crack a bit wider, and so did a new OCC regulation in February. As a consequence, the number of applications to create any kind of national bank rose from no more than six per year under President Joe Biden to 18 last year and 22 this year under Trump.
Not every application passes muster. Of the 40 applications under Trump, about half have been approved. Approval for the First National Bank of Trump is not yet final, so maybe we can’t yet accuse the OCC of playing favorites. But do you doubt final approval, contingent mostly on raising sufficient capital (not a problem!) will arrive in short order?
A CNBC story carries a correction, demanded probably by some functionary at the OCC, that apologizes for initially understating the role in the selection process played by career civil servants. They are the only parties who review applications, the correction states. Well, maybe. But these career employees aren’t blind. They’ve had ample opportunity to observe what Trump and his chief enforcer, White House budget chief Russell Vought, do to civil servants who get in their way. The president wants a bank. Do you really want to be the schmuck who tells him that would violate the emoluments clauses of the United States Constitution? “If you follow the law,” Senator Elizabeth Warren warned Gouldin February, “you will reject the president’s application.” Gould did not follow the law, and neither did the civil servants who approved this application.
There’s ample reason to question whether we should let any crypto firm charter a national trust bank. The banking industry is against it because they fear regulators will allow crypto’s national trust banks to so resemble commercial banks, with latitude to in effect take in deposits and make loans, that they will pose a competitive threat. Globally, stablecoins are projected to suck $1 trillion out of bank deposits during the next two years. Commercial banks point out that crypto-owned banks have lower capital requirements than they do, and in general are regulated more lightly, even as they traffic in a riskier form of currency. They have a point! Warren has said the new national trust banks will be “effectively crypto banks that want to evade the fundamental safeguards and obligations that come with being a bank.”
The OCC’s move to let Trump charter a crypto bank lowers this regulatory discussion to a level of squalor that CNBC is not well-equipped to appreciate. This is a very sordid political scandal. Already WLF has been the venue for a pay-to-play scandal surrounding the sale of advanced AI chips to the United Arab Emirates two weeks after UAE purchased $2 billion in WLF stablecoin. That made Teapot Dome look like an anthill even before we learned further that the UAE was Trump’s business partner, having purchased a 49 percent stake in World Liberty Financial. Now Trump is giving himself a bank that he will, in effect, regulate himself.
Don’t tell me Trump will lack influence over the Comptroller of the Currency. Gould has a track record of playing Trump’s lackey. Gould called Trump Accounts—which Treasury Secretary Scott Bessent, thinking he was bestowing a compliment, called “a back door for privatizing Social Security”—“one of the most impactful financial literacy tools in our country’s history.” Trump issued an executive order last year making clear that all independent agencies answer to Trump, and (excepting the Federal Reserve) the Supreme Court backed him up on that. You think Trump is going to let Gould tell him how to run his bank?
“President Trump is now the first President in history to approve, operate, and supervise his own bank,” Warren said Friday. “This is the most brazen act of self-dealing our financial system has ever seen.” She used the occasion to introduce legislation prohibiting the president or vice-president or any child or spouse from owning or controlling a bank. The Digital Asset Market Clarity Act, a crypto bill that’s cleared the House and the Senate Banking Committee, may not reach final Senate passage unless Republicans concede on this point. If the GOP refuses to bar Trump from becoming a banker/president, it will hand a great gift to the Democrats in the midterms. First, though, we need to get this story off the financial pages.
