ABA chair sees room for change under Trump administration

John Asbury, chair of the American Bankers Association, has high expectations for change in 2025.

High on his priority list is leveling the playing field on which community banks compete with tax-exempt credit unions as well as doing away with what Asbury calls "artificial" asset thresholds that trigger elevated regulatory scrutiny based on size rather than complexity.

Community banks for years have bemoaned credit unions capitalizing on their exemption from federal income tax to expand beyond their original niches. Bankers argue that many credit unions stray from their core mission of serving people of modest means in limited geographic areas. Credit unions get federal tax exemptions because of that mission.

Now, Asbury said the trend is accelerating as more credit unions buy banks, adopt their business lines and tout the acquisitions as efficient steps toward an expansion of banking services. For those credit unions that compete with banks — and especially those that buy banks — taxes should apply, he said. He noted that when credit unions buy banks, they remove tax-paying businesses from local markets.

"I think there's a fleecing of taxpayers," Asbury, who is also president and CEO of Atlantic Union Bankshares in Richmond, Virginia, said in an interview.  "That goes way beyond the intent of why we have credit unions.

"If you are going to act like a bank," he added, "you must be regulated like a bank."

Republicans in Congress this month floated the idea of subjecting credit unions to federal income tax. They said in a document outlining their priorities that a credit union tax could raise $30 billion over a 10-year period. It could help offset the cost of extending 2017 tax cuts passed during President Trump's first term. When Trump started his second term this month, he vowed to renew the lower corporate tax levels this year.

Asbury noted Trump's broadly pro-business posture and openness to both deregulation and policy changes that support the private sector.

"I think it will be a consequential year," Asbury said. "We believe in the free market. This is a capitalist society. No one should apologize for that…We believe in a level playing field above all."

Credit unions are buying banks to diversify both their business lines and footprints. Credit unions argue that when they acquire banks — or expand organically to fill gaps left by bank consolidation —  they help to ensure communities retain local financial services, as opposed to local banks folding or selling to larger companies based elsewhere.

Jim Nussle, president and CEO of industry lobby America's Credit Unions, in a letter this month to House Ways and Means Committee leaders who are slated to assess tax policies in a series of meetings early this year, defended current rules. He said credit unions use tax exemptions to extend credit at lower loan rates to borrowers who may be overlooked by banks or cannot afford to work with conventional financial services companies.

The credit union tax exemption dates to President Franklin Roosevelt's 1934 New Deal.

"During the depths of the Great Depression, when banks and savings associations were closing across the country, Congress passed the FCU Act to charter federal credit unions, not-for profit financial cooperatives that provide safe, affordable financial services products for those left behind by the bankers who decided that serving working class Americans was not profitable and worth their time," Nussle said.

America's Credit Unions this month launched a series of digital ads under the "Don't Tax My Credit Union" banner to amplify that message.

Asbury staunchly disagrees with Nussle, asserting that allowing tax-exempt companies to roam the same turf as banks undermines the basic foundation of free market competition.

"It is a terrible public policy on the face of it," he said. "It makes no sense at all."

Credit union-bank deals swelled to a record level of 22 last year amid a broader push for scale in the lending industry. The industry far surpassed the 2023 total of 11 and the prior annual record of 16 set in 2022. These deals accounted for 18% of the 125 total M&A transactions involving a bank seller in 2024, according to S&P Global Market Intelligence data.

Frontwave Credit Union in suburban San Diego struck a deal to acquire neighboring Community Valley Bank in Southern California this month. It marked the first credit union-bank deal of 2025.

More small banks are selling because they lack the heft needed to absorb mounting technology costs and lofty regulatory expenses.

Arbitrary thresholds

Asbury's own experience at Atlantic Union underlines this trend. When he joined the bank in 2016, it had about $8 billion of assets. It now has $25 billion and, with the expected April closing of its plan to acquire Olney, Maryland-based Sandy Spring Bancorp for $1.6 billion in stock, it would jump to nearly $40 billion. The deal was the third-largest inked in the banking sector last year.

Asbury said Atlantic Union was firmly committed to growth mode when he took over, but it made the decision to surge in size because of the $10 billion regulatory threshold. When banks cross that level, they face Consumer Financial Protection Bureau supervision, increased rules and an immediate, steep hit to revenue. Most notably, they are subject to the price caps of the Durbin Amendment that can cost a bank much of its debit interchange fees.

"You can lose half your debit interchange income," Asbury said. "That is a significant impact." He noted that interchange fees help fund fraud mitigation and technology that creates efficiencies and lowers costs for customers.

As such, Asbury said, Atlantic Union and many other banks have no choice but to leap over the $10 billion line, amassing the substantial scale needed to spread out regulatory burdens over a large base.

"I've lived through that at Atlantic Union," he said. "We were forced into a regulatory regime. It's very much an artificial barrier…I can tell you it drives consolidation."

Addressing arbitrary thresholds was top of mind for Asbury as former Virginia Bankers Association chair, ABA American Bankers Council chair and now as chair of the ABA board. He is lobbying for legislative changes that would base regulatory scrutiny — and costs — on banks' complexity. This includes allowing more banks to grow beyond $10 billion without having to give up big chunks of interchange revenue.

Given Trump's deregulation vows and Republican majorities in both the House and Senate, Asbury said, "I do think we have opportunity." But he also said time is of the essence, given there is only a two-year window until mid-term elections that could once again reshape Washington. "I do think it is creating a sense of urgency."

Like credit unions, retailers are vocal in their opposition. The Retail Industry Leaders Association says interchange fees often run much higher than banks' actual costs to process debit transactions, unfairly hurting merchants and pushing up costs for consumers.

Asbury has more than 35 years of banking experience. Before Atlantic Union, he was president and CEO of First National Bank of Santa Fe in New Mexico. Before that, he was senior executive vice president and head of the Business Services Group at Regions Financial. Earlier in his career, he spent 17 years at Bank of America, ultimately leaving as the Pacific Northwest region executive for business banking in Seattle.