WASHINGTON – Today, U.S. Senator Chris Van Hollen (D-Md.) as well as Senators Ben Cardin (D-Md.), Mark Warner (D-Va.) and Tim Kaine (D-Va.) sent a letter to the financial regulators asking them to take action to mitigate the adverse impacts of the coronavirus on workers in the hospitality and tourism industry. The letter was sent to Jerome Powell, Chairman of the Federal Reserve; Joseph Otting, Comptroller of the Currency; Jelena McWilliams, Chair of the Federal Deposit Insurance Corporation; Mark McWatters, Chairman of the National Credit Union Administration; and John Ryan, President and CEO of the Conference of State Bank Supervisors.

The Senators write, “As Americans take necessary precautions to protect the well-being of their families, their workplaces and their communities from the novel coronavirus (COVID-19), the economic fallout on workers and businesses is becoming increasingly severe. Given the recent guidance and bans on travel, the millions of workers who serve in sectors like hospitality, travel, special events, and tourism are particularly hard hit. To that end, we urge you to take all actions within your power to ensure that workers do not lose their jobs or wages as a result of this public health crisis while also using your authority to maintain the safety and soundness of our banking system.”

They note, “This is of particular concern to our regional economy, which relies heavily on tourism and business travel, especially during this time of year. To put this into context, the Maryland Department of Commerce estimates that in 2018 alone, visitor spending contributed $18.1 billion to Maryland’s economy. Virginia’s tourism industry generated $26 billion in visitor spending in 2018. And, in 2018 the District of Colombia saw tourists spend $7.8 billion.”

They continue, “We appreciate your recent joint agency statement to encourage financial institutions to meet the needs of customers and members affected by the novel coronavirus/COVID-19 outbreak. We encourage you to apply similar guidance for businesses in the travel, hospitality, and tourism sectors so they can continue to pay their employees and provide them with full pay and benefits, including paid sick leave, during the ongoing coronavirus health crisis. Enacting this guidance would help employees, lenders, and businesses alike – lenders would not have to write-off loans, businesses could continue paying their employees, and employees would continue receiving paychecks.”

They close the letter noting a variety of options available to the regulators, including: 

• Providing loan workouts to modify or restructure loans to avoid foreclosure
• Allowing borrowers to defer payments without penalty, provided that the businesses use the deferral for employee-related expenses
• Allowing borrowers to defer the principal portion of the monthly payment and make an interest-only payment.
• Allowing borrowers to refinance without fees.
• These measures could not be used in any way for owner distributions. 

The full text of the letter is available below.

Dear Chairman Powell, Comptroller Otting, Chair McWilliams, Chairman McWatters, and Mr. Ryan: 

As Americans take necessary precautions to protect the well-being of their families, their workplaces and their communities from the novel coronavirus (COVID-19), the economic fallout on workers and businesses is becoming increasingly severe. Given the recent guidance and bans on travel, the millions of workers who serve in sectors like hospitality, travel, special events, and tourism are particularly hard hit. To that end, we urge you to take all actions within your power to ensure that workers do not lose their jobs or wages as a result of this public health crisis while also using your authority to maintain the safety and soundness of our banking system. 

While the first priority for our response has rightly focused on detection and medical care, we are also developing a legislative response to the harmful economic impacts this pandemic is having on working families. Last week, Congress passed the Coronavirus Preparedness and Response Supplemental Appropriations Act of 2020, which includes provisions to help small businesses, and Congress is currently considering additional measures. 

With conferences and other public events canceled, travel discouraged, and consumers staying home, the hospitality and tourism industries are among the sectors that have been particularly hard hit, and workers in these industries are at greater risk of losing their jobs and/or wages.

Federal data shows that travel and tourism accounted for 5.9 million U.S. jobs in 2018, including positions in lodging, dining and transportation. In 2017 alone, business events in North America generated $221.6 billion in direct GDP, representing 35.7% of global business events GDP. Consequently, the damaging economic impact on this sector and its workforce will reverberate throughout the economy. 

This is of particular concern to our regional economy, which relies heavily on tourism and business travel, especially during this time of year. To put this into context, the Maryland Department of Commerce estimates that in 2018 alone, visitor spending contributed $18.1 billion to Maryland’s economy. Virginia’s tourism industry generated $26 billion in visitor spending in 2018. And, in 2018 the District of Colombia saw tourists spend $7.8 billion. 

We appreciate your recent joint agency statement to encourage financial institutions to meet the needs of customers and members affected by the novel coronavirus/COVID-19 outbreak. We encourage you to apply similar guidance for businesses in the travel, hospitality, and tourism sectors so they can continue to pay their employees and provide them with full pay and benefits, including paid sick leave, during the ongoing coronavirus health crisis. Enacting this guidance would help employees, lenders, and businesses alike – lenders would not have to write-off loans, businesses could continue paying their employees, and employees would continue receiving paychecks.

For businesses that have been in good standing with their financial institution prior to the crisis and that commit to retaining employees and providing them with full pay and benefits, including paid sick leave, we encourage you to implement the appropriate mix of the following options:

• Providing loan workouts to modify or restructure loans to avoid foreclosure
• Allowing borrowers to defer payments without penalty, provided that the businesses use the deferral for employee-related expenses
• Allowing borrowers to defer the principal portion of the monthly payment and make an interest-only payment.
• Allowing borrowers to refinance without fees.
• These measures could not be used in any way for owner distributions. 

As we continue to see impacts of coronavirus, we urge you to take proactive measures to ensure the long-term health of these hard hit sectors and their employees. Thank you for your attention to this important issue.

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