What does Preamble of Government Bailout Prevention Act do?

This bill aims to prohibit the provision of federal funds to state and local governments and school districts for payment of obligations. It also seeks to prevent federal agencies from financially assisting state and local governments and school districts that have defaulted on their obligations.

What does SHORT TITLE. of Government Bailout Prevention Act do?

This bill is formally titled the Government Bailout Prevention Act.

What does DEFINITION. of Government Bailout Prevention Act do?

This section defines the term 'State' as used within the Act. The definition includes any of the several States. The definition also encompasses the District of Columbia. Furthermore, the definition extends to any territory or possession of the United States.

What does PROHIBITION ON THE USE OF FEDERAL FUNDS TO PAY OR GUARANTEE of Government Bailout Prevention Act do?

This section prohibits the use of federal funds to purchase or guarantee obligations of state, municipal, local, county, or school district governments facing financial distress. The prohibition applies to governments that have filed for bankruptcy, defaulted on obligations, are at risk of defaulting, or are likely to default, starting January 1, 2026. The Secretary of the Treasury is restricted from using general fund revenues or borrowed funds to assist financially distressed government entities. Federal Reserve banks are also prohibited from providing financial assistance to such entities, including purchasing their bonds. These restrictions do not apply to federal assistance provided in response to a declared disaster.

What does APPLICABILITY. of Government Bailout Prevention Act do?

This section clarifies the applicability of the prohibition outlined in section 3. The prohibition includes debt restructuring and related activities. Discretionary appropriations and direct spending, as defined in the Balanced Budget and Emergency Deficit Control Act of 1985, are excluded from the prohibition. Grants awarded by the United States to state, municipal, local, county, or school district governments are also excluded.

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Government Bailout Prevention Act

Last updated: 6/15/2026 · Introduced: 6/15/2026

Author: W. Steube (R-FL)

TL;DR (AI)

This bill prohibits the use of federal funds to purchase or guarantee obligations of financially distressed state, local, and school district governments, starting January 1, 2026.
The Act restricts the Secretary of the Treasury and Federal Reserve banks from providing financial assistance to governments at risk of default, with exceptions for disaster relief.
Certain federal spending, including discretionary appropriations, direct spending, and grants to state and local governments, are excluded from this prohibition.

119th Congressin committeeOfficial page

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Other Sections

Includes provisions on preamble, short title., and 3 more.

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