Legislative Documents
These are letters written by Keith and legislative documents for public reference.

Congressmen Ellison & McDermott send President Obama a Letter About Humanitarian Assistance in Gaza Print
Wednesday, 20 January 2010 23:00

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Treasury Secretary Geithner’s response regarding whether Congress should specify leverage requirements for banking organizations Print
Sunday, 10 January 2010 23:00
Treasury Secretary Geithner’s Response to this letter Congressman Ellison sent on September 24th.
 
Letter to Chairman Bernanke and Secretary Geithner Regarding Bank Capital Standards Print

Letter_to_Bernanke_and_Geithner.pdf

September 24, 2009

The Honorable Ben S. Bernanke
Chairman
Board of Governors of the Federal Reserve System
20th Street & Constitution Avenue, NW
Washington, DC 20551

The Honorable Timothy Geithner
Secretary
U.S. Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, DC 20220

Dear Chairman Bernanke and Secretary Geithner,

As you know, excessive leverage was a key component of the financial crisis.  Investment banks leveraged their balance sheets to stratospheric levels by using short-term wholesale financing (like repurchase agreements and commercial paper).  Meanwhile, some entities regulated as bank holding companies (BHCs) used off-balance-sheet entities to warehouse risky assets, thereby evading their regulatory capital requirements.  These entities’ reliance on short-term debt to fund the purchase of oftentimes illiquid and risky assets made them susceptible to a classic bank panic.  The key difference was that this panic wasn’t a run on deposits by scared individuals, but a run on collateral by sophisticated counterparties.  

The Treasury highlights this very problem in its policy statement before the recent summit of G-20 finance ministers in London.  To address this problem, the Treasury advocates stronger capital and liquidity standards for banking firms, including “a simple, non-risk-based leverage constraint.”  The U.S. is one of only a few countries that already has leverage requirements for banks.  Leverage requirements supplement risk-based capital requirements that federal banking regulators have in place pursuant to the Basel II Accord, an international capital agreement.  While important features of our system of financial regulation, leverage requirements only apply to banks and bank holding companies and therefore have not covered a wide array of financial institutions, including many that are systemically important.  Moreover, leverage requirements have generally not captured the considerable risks associated with off-balance-sheet activities.      

Of course, the Administration looks to address the shortcomings in the existing regulatory system through a proposal to regulate large, systemically-significant financial institutions as Tier 1 Financial Holding Companies (FHCs).  Building upon its existing authority as the consolidated supervisor of all BHCs (which includes FHCs), the Federal Reserve would be responsible for overseeing and regulating the Tier 1 FHCs under the plan.  In the legislative draft of the proposal, the Federal Reserve would have the authority to prescribe capital requirements and other prudential standards for these institutions that are stronger than those for all other BHCs.  To that point, the text specifically says, “The prudential standards shall be more stringent than the standards applicable to bank holding companies to reflect the potential risk posed to financial stability by United States Tier 1 financial holding companies and shall include, but not be limited to—(A) risk-based capital requirements; (B) leverage limits; (C) liquidity requirements; and (D) overall risk management requirements.”  

The application of leverage limits – as advanced by the Treasury’s G-20 policy statement and by the Administration’s financial regulatory reform plan – is a simple and elegant way to limit risk at specific financial institutions (and within the overall financial system).  The financial crisis has underscored the importance of leverage requirements and manifested the problems associated with relying upon risk-based capital requirements alone.  While the ostensible purpose behind the Basel II Accord was to align economic and regulatory capital, the agreement’s reliance upon the ratings of credit rating agencies and on the internal risk assessments of the banks themselves has been seriously called into question by recent events.  A leverage requirement has the advantage of setting a minimum standard irrespective of what more subjective and assumption-based capital calculations may suggest.   

Nevertheless, there are some open questions regarding exactly how a leverage requirement should be applied.  Some scholars and policy experts have advocated putting in place a leverage requirement for banks and other financial institutions that is set in statute.  As Congress moves forward on comprehensive financial regulatory reform, it may consider such a requirement.  I would therefore be interested to hear your views regarding the wisdom of such an approach.  
As you know, setting capital standards requires decisions regarding what institutions would be covered, how capital would be defined, and what levels the requirements would be set.  In light of that, what specific difficulties would you anticipate Congress facing with respect to specifying such a requirement?  In addition, would a statutory requirement be too inflexible and place too many constraints on regulators with respect to refining regulatory capital requirements and negotiating with bank regulators from other countries?   

Thank you for your consideration of these questions.  I look forward to your responses.  


Sincerely,


Rep. Keith Ellison

 
Keith Signs Letters Regarding Access to Health Care for Immigrants Print
Tuesday, 22 September 2009 23:00

Letter Opposing Bar on Undocumented Immigrants from Purchasing Insurance at Full Cost in Exchange 640.36 Kb 23/09/2009

Thank you for your leadership in the health care reform debate. Like you, the President, and every other American, we seek reforms in health care that will contain costs in a system that has become increasingly unaffordable, especially for working class families. However, Senate Finance Committee Chairman Max Baucus recently proposed to exclude undocumented immigrants from purchasing health coverage through the insurance “exchange.”  This proposal runs counter to some of the core components of health care reform: containing health care costs, increasing the use of preventive care services, and streamlining the health delivery system. We write to urge you to oppose this proposal.

Health care reform has been structured around the idea that the U.S. needs more people, especially young and healthy individuals, to buy insurance and pay into the health care system to make health care affordable for all. For this reason, the proposals introduced by the Administration and both houses of Congress seek to institute an individual mandate for purchasing coverage and investments in prevention, counting on the participation of millions more healthy individuals to help drive down the cost of health care. The cost of providing the uninsured with expensive emergency room care has been frequently cited by many in the health reform debate as a key contributor to skyrocketing premiums.

As such, it is not rational to exclude individuals who are willing and able to share in the responsibility of paying into the system.  As immigrants tend to come to the U.S. during prime working years, they tend to be younger and healthier. Immigrants have been shown to seek substantially less medical care even while carrying insurance than native born Americans. In fact, immigrants spend 55 percent less on health care than U.S. born individuals.  Thus, immigrants’ contribution to the health care system would buoy the affordability of health care for everyone else in this nation. Chairman Baucus’s proposal to prevent undocumented immigrants from purchasing unsubsidized coverage will only add to uncompensated care costs and costly emergency room visits. Costs due to such visits will be shifted and distributed among all those who have been mandated to carry insurance. With skyrocketing health care costs, legislators should do all that we can to contain costs for working American families.

Congress and the Administration have also recognized that prevention is a key element of reform.  Investing in preventive care is cost-effective and results in better health outcomes and long-term cost-savings. Yet, the success of a prevention framework is critically dependent upon access to health coverage. Continuing to allow undocumented immigrants to purchase unsubsidized, private health insurance coverage will contribute to the goal of replacing emergency care with the increased use of much cheaper preventive care.

There are also public health implications when a large portion of the U.S. population has severely limited access to health care coverage. It is good public health policy for everyone residing in our country to have access to health care coverage. Disease and illnesses do not discriminate based on immigration status, and neither should America’s health care policy.  The threat of pandemics and other infectious diseases demonstrate particularly well the folly of politicized public health policy. For example, the rapid spread of H1N1 flu should make policymakers cognizant of and guarded about the public health implications of effectively denying access to health care coverage to a large portion of the population.

Finally, Senator Baucus’s proposal would require the implementation of a costly immigration status verification requirement.  As we learned from implementing Medicaid documentation requirements under the Deficit Reduction Act of 2005, such verification requirements are cumbersome, ineffective, expensive, and create administrative barriers that prevent citizens from getting the health care they need.  In 2007, the Government Accountability Office found that the documentation requirement resulted in enrollment declines for eligible citizens and posed administrative burdens (GAO-07-889). Twenty-two of forty-four states reported declines in Medicaid enrollment due to the requirement, and a majority of these states attributed the declines to delays in or losses of Medicaid coverage for individuals who appeared to be eligible citizens.  Thus, even if undocumented persons are barred from purchasing health insurance in the exchange, we urge you to refrain from imposing documentation requirements that will prevent citizens and other eligible individuals from obtaining health care coverage.

The proposal to prohibit undocumented immigrants from buying unsubsidized health care coverage is ill advised and we hope that you will not let the health care reform debate slip away from the goals it seeks to achieve.

We appreciate your openness during this process and look forward to continuing our work together to ensure that Congress passes strong health care reform legislation that includes all measures possible to reduce health care costs for American families.

Letter Opposing Waiting Periods for Legal Immigrants in Healthcare Reform 783.02 Kb 23/09/2009

We applaud the achievements that our Congress has made in advancing the health care reform debate and as Members of Congress who are committed to advocating for all, including the most vulnerable communities in our nation, we are proud to be an active part of the health care debate. As President Obama stated in his address to Congress, we have made unprecedented strides in moving health care legislation forward, with strong support from diverse stakeholders. Today, we write to strongly urge you to include in the final House and Senate versions of health care reform legislation a provision to eliminate the five year waiting period for legal immigrants in the Medicaid program. We also write to oppose the imposition of any further barriers on legal immigrants seeking to access federal health programs, including waiting periods to obtain affordability credits to purchase health insurance.

I. Treatment of legal immigrants under current law

As you know, current federal law prohibits use of federal Medicaid funds to cover lawfully present immigrant adults in the U.S. during their first five years here, even when they meet all other eligibility requirements. This arbitrary 5-year waiting period leaves vulnerable, low-income legal immigrants uninsured, requiring them to delay medical care until their condition worsens. The unnecessary and burdensome waiting period has increased racial and ethnic health disparities, and thwarts the goal of health care reform. We believe it is essential to eliminate barriers and streamline access to affordable health care for more people and would support an amendment to achieve this goal.

Congress recognized the harm of a waiting period for vulnerable residents and partially addressed the situation by allowing states to opt to cover lawfully residing immigrant children and pregnant women without a five year waiting period in the Children’s Health Insurance Program Reauthorization Act of 2009 (H.R. 2) enacted earlier this year. Although this was a step in the right direction, these children are not guaranteed access to affordable health care and their coverage is vulnerable to budget cuts and ideological changes to state policy. Even in states that are taking up the new option, parents and grandparents of immigrant children remain without access to affordable health care.

Recognizing the importance of providing access to affordable care to all of its residents, many states use state funds to provide health care to legal immigrant adults who are otherwise forced to wait years for access to affordable health care due to the federal five-year waiting period. Again, those programs are vulnerable to budget cuts and freezes – particularly during challenging economic times. These states are making public-health conscious and compassionate choices to care for their residents and they deserve more federal help for their efforts. Furthermore, legal immigrants work and pay taxes; both the state and federal government have an obligation to them to use those tax dollars wisely and fairly.

According to the American Journal of Public Health, immigrants tend to arrive to the U.S. in their prime working years and are typically younger and healthier than the rest of the U.S. population. Their health care expenditures are fifty five percent lower than expenditures of a native-born U.S. citizen with similar characteristics. Affordability credits proposed to help ease the burden of the individual insurance mandate in the House and Senate bills will be provided on a sliding scale – legal immigrants will fall all along the eligible income rate, with many making too much to qualify. Allowing legal immigrants to access subsidies would allow immigrant families to purchase health insurance that they otherwise would not be able to afford. Allowing younger, healthier families to buy into the insurance pool would lower premium costs for all Americans.

It is not only fiscally shortsighted, but also arbitrary and fundamentally unfair to deny health care coverage to legal immigrants. Immigrants are part of our families, our communities, our economy, and contribute to the fabric of America. It is simply wrong that their taxes would pay for public health insurance programs to which they are not allowed access. The majority of the American public recognizes the fundamental unfairness of this unequal treatment and supports eliminating the five-year waiting period for legal immigrants.

Finally, there are public health implications when a large portion of the U.S. population cannot afford quality health care. It makes good public health policy for everyone residing in our country to have access to quality and affordable care. Disease and illnesses do not discriminate based on immigration status, and neither should America’s health care policy. The threat of pandemics and other infectious diseases demonstrate particularly well the folly of politicized public health policy. For example, the rapid spread of H1N1 flu should make policymakers cognizant of and guarded about the public health implications of effectively denying access to health care coverage to legal immigrants.

II. Opposing Additional Barriers for Legal Immigrants


We applaud the leadership in the House and on the House committees of jurisdiction for refraining from imposing any further waiting periods for legal immigrants. However, there are some who do not share this approach. We write to urge you to oppose the imposition of any additional waiting periods, and any other barriers to access for legal immigrants to health care.

We appreciate your openness during this process and look forward to continuing our work together to ensure that the House of Representatives and the Senate passes strong health care reform legislation that addresses the needs of all our diverse communities.

 
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