Palmer Luckey, the sandal-wearing, Hawaiian-shirt-clad tech maverick who sold Oculus VR to Facebook for $2 billion a decade ago, has now conquered an entirely different frontier: banking. His startup bank, Erebor — named after the Lonely Mountain fortress in J.R.R. Tolkien’s The Hobbit — has become the first newly created bank to receive a national charter under the second Trump administration, launching with a staggering $635 million in capital. The milestone marks a dramatic shift in the regulatory environment for new bank formation, which had ground to a near-halt over the past fifteen years, and signals that the defense-tech billionaire’s ambitions extend far beyond virtual reality headsets and autonomous weapons systems.

The Office of the Comptroller of the Currency granted Erebor its preliminary conditional approval, making it the first de novo national bank charter issued since the current administration took office. The achievement is notable not just for Luckey personally, but for the broader financial sector: new bank charters have been exceedingly rare since the 2008 financial crisis, with regulators under both Obama and Biden administrations maintaining what many in the industry characterized as a near-freeze on approvals. According to The Wall Street Journal, Erebor’s approval represents a tangible sign that the Trump administration is following through on its promises to ease the path for new financial institutions.

A Defense-Tech Billionaire Turns His Gaze to Finance

Luckey, 32, is no stranger to disruption. After founding Oculus VR in his parents’ garage as a teenager and selling it to Meta Platforms (then Facebook) in 2014, he was ousted from the company in 2017 amid political controversies. He rebounded by founding Anduril Industries, a defense technology company now valued at over $28 billion that builds autonomous surveillance towers, counter-drone systems, and AI-powered military hardware for the Pentagon and allied governments. His decision to enter banking might seem like a sharp left turn, but those who know Luckey say it reflects his conviction that the defense industrial base needs financial infrastructure purpose-built to serve it.

Erebor is designed to cater specifically to the defense and technology sectors — industries that have often found themselves underserved or actively shunned by traditional banks wary of reputational risk and regulatory scrutiny. The bank’s name itself is a statement of intent: in Tolkien’s mythology, Erebor is the Dwarf kingdom under the Lonely Mountain, a vast repository of wealth and craftsmanship. Luckey has leaned into the literary reference with characteristic irreverence, but the underlying business thesis is deadly serious. Defense contractors, particularly smaller and mid-sized firms, have long complained about difficulty accessing banking services, with some reporting that major banks have closed their accounts or refused to do business with companies involved in weapons manufacturing.

$635 Million in Capital: A War Chest That Dwarfs Typical De Novo Banks

The $635 million in initial capital that Erebor is launching with is extraordinary by any measure. Most de novo banks — industry parlance for newly chartered institutions — typically launch with between $20 million and $50 million in capital. Erebor’s capitalization is more than ten times that upper range, placing it immediately among the better-capitalized community and regional banks in the country. The massive war chest suggests that Luckey and his backers intend to scale rapidly and take on significant lending activity from day one, rather than following the slow, cautious growth trajectory typical of new banks.

The investor roster behind Erebor reads like a who’s who of Silicon Valley’s defense-tech and libertarian-leaning venture capital community. Lux Capital announced on X that it is a proud investor in Erebor, calling the bank’s charter approval a historic moment. Lux Capital, co-founded by Josh Wolfe and Peter Hébert, has long been one of the most prominent venture firms investing at the intersection of deep technology and national security. The firm’s involvement lends significant credibility to Erebor’s mission and suggests that the bank will be deeply embedded in the defense-tech ecosystem from inception. Other investors have not been fully disclosed, but industry observers expect a roster heavy with names from the so-called “PayPal Mafia” and adjacent networks that have coalesced around both defense technology and the Trump political orbit.

The De Novo Drought: Why New Bank Charters Had All But Disappeared

To understand why Erebor’s charter is significant, one must appreciate just how rare new bank formations have become. In the years before the 2008 financial crisis, the FDIC approved an average of roughly 150 new bank charters per year. After the crisis, that number collapsed. Between 2010 and 2023, fewer than 20 de novo banks were chartered in total — a decline of more than 99 percent from pre-crisis levels. Regulators imposed heightened capital requirements, extended examination periods, and subjected applicants to what many bankers described as an opaque and discouraging process. The result was an aging and consolidating banking sector, with thousands of community banks disappearing through mergers and acquisitions while virtually no new entrants emerged to replace them.

The Trump administration has signaled a clear intent to reverse this trend. Acting Comptroller of the Currency Rodney Hood and other senior officials have publicly stated that encouraging de novo bank formation is a priority. The approval of Erebor’s charter is the most concrete evidence yet that this rhetoric is translating into action. As reported by The Wall Street Journal, the OCC’s willingness to greenlight a bank with an unconventional founder and a niche focus on defense suggests a broader openness to innovative charter applications that would have faced steep headwinds under previous administrations.

Luckey’s Political Connections and the Trump Factor

It is impossible to discuss Erebor without addressing the political dimensions. Luckey was one of the earliest and most visible supporters of Donald Trump in the technology industry, backing him during the 2016 campaign at a time when doing so was deeply unfashionable in Silicon Valley. His political contributions and public support for Trump reportedly contributed to his departure from Meta. In the years since, Luckey has become a central figure in the growing alliance between the tech right and the Republican Party, with Anduril emerging as a favored contractor of defense hawks in both parties.

Luckey’s relationship with the administration raises inevitable questions about whether Erebor received favorable treatment in the charter approval process. Administration officials and Erebor’s representatives have pushed back on any such suggestion, noting that the bank met all standard regulatory requirements and that the OCC’s process was conducted on the merits. Still, the optics are unavoidable: a prominent Trump supporter receiving the first new bank charter of the Trump 2.0 era will invite scrutiny from both regulators and political opponents. Luckey, for his part, has never shied away from controversy, and his public persona — the Hawaiian shirts, the flip-flops, the Tolkien references — suggests he is unlikely to be fazed by the attention.

Serving the Defense Industrial Base: A Gap in the Market

The strategic rationale for a defense-focused bank is more compelling than skeptics might initially assume. Over the past decade, a growing number of banks have adopted environmental, social, and governance (ESG) policies that have led them to restrict or terminate relationships with companies in the firearms, ammunition, and defense sectors. This phenomenon, sometimes called “debanking,” has been a particular source of frustration for smaller defense contractors who lack the leverage to push back against large financial institutions. Several members of Congress have held hearings on the issue, and the topic has become a flashpoint in the broader culture war over the role of political considerations in financial services.

Erebor aims to fill this void directly. By building a bank from the ground up with the defense and technology sectors as its primary clientele, Luckey is betting that there is substantial unmet demand for financial services among companies that have been marginalized by the ESG movement. The bank is expected to offer commercial lending, treasury management, and other corporate banking services tailored to the unique needs of defense contractors, including the ability to handle classified or sensitive transactions and navigate the complex regulatory requirements associated with government contracting. If successful, Erebor could become the go-to financial institution for the rapidly growing defense-tech startup ecosystem that Anduril helped pioneer.

What Tolkien’s Mountain Tells Us About Luckey’s Ambitions

The choice of the name Erebor is quintessentially Luckey — playful on the surface, but layered with meaning. In Tolkien’s legendarium, Erebor was not merely a treasure hoard but a center of industry and craftsmanship, a place where dwarves forged weapons and armor of unmatched quality. The mountain was also famously reclaimed after being seized by the dragon Smaug, a narrative of restoration and reclamation that resonates with Luckey’s own story of being pushed out of one company and building another, arguably more consequential, enterprise in its wake. Whether intentional or not, the name also carries a hint of defiance — a declaration that this bank, like the dwarves of Erebor, will not be driven from its purpose by hostile forces.

The bank’s formation also reflects a broader trend of technology entrepreneurs moving into regulated industries with the intent of reshaping them. From Elon Musk’s acquisition of Twitter to the proliferation of fintech companies seeking bank charters, the past several years have seen a growing willingness among tech founders to engage directly with the regulatory apparatus rather than trying to route around it. Luckey’s approach with Erebor is notable for its directness: rather than building a fintech platform and seeking a limited-purpose charter, he has gone straight for a full national bank charter, accepting the full weight of OCC supervision and FDIC insurance requirements in exchange for the credibility and capabilities that come with being a fully chartered national bank.

The Road Ahead for Erebor and the New Banking Era

Erebor still faces significant hurdles before it can begin full operations. The preliminary conditional approval from the OCC is just the first step; the bank must still satisfy a series of conditions, including finalizing its management team, completing its technology infrastructure, and demonstrating compliance with Bank Secrecy Act and anti-money-laundering requirements. De novo banks are also subject to enhanced supervisory oversight during their first several years of operation, with examiners paying particularly close attention to lending practices, capital adequacy, and risk management. Given the bank’s outsized capitalization and the caliber of its backers, however, most observers expect Erebor to clear these hurdles without major difficulty.

The broader implications of Erebor’s charter extend well beyond one bank. If the Trump administration continues to approve new charters at an accelerated pace, it could catalyze a wave of de novo bank formation not seen in over a decade. Other entrepreneurs in the defense, energy, cryptocurrency, and firearms sectors — industries that have complained about being debanked — may be emboldened to pursue their own charters. For the banking industry as a whole, the entry of well-capitalized, technologically sophisticated new competitors could inject a dose of dynamism into a sector that has been defined by consolidation and caution for the better part of two decades. Palmer Luckey, the college dropout who built a virtual reality empire in his garage, may have just fired the starting gun on a new era of American banking — and he did it wearing flip-flops.