Summary
No Bailouts for State, Territory, and Local Governments Act
This bill prohibits the use of federal funds to purchase or guarantee obligations of, issue lines of credit to, or provide direct or indirect grants-in-aid to any state (defined to include the District of Columbia and any U.S. territory or possession), municipal, local, or county government that, on or after January 1, 2013, has filed for bankruptcy, has defaulted on its obligations, is at risk of defaulting, or is likely to default, without such federal assistance, if such purchase, guarantee, extension of credit, or grant is made to assist the government in: (1) avoiding defaulting on the payment of principal or interest due on an obligation of the government, or (2) curing such a default.
The Departrment of the Treasury is prohibited from using general fund revenues or borrowed funds to purchase or guarantee, for the same purposes, any asset or obligation of any such state, municipal, local, or county government.
The Board of Governors of the Federal Reserve System is prohibited from: (1) providing or extending to, or authorizing with respect to, such a state, municipal, local, or county government, or other entity with taxing authority or bonding authority, for the same purposes, any funds, loan guarantees, credits, or any other financial instrument or other authority, including bond purchases; or (2) otherwise assisting such a government entity, for the same purposes, under any Board authority.
Such prohibitions shall not apply to federal assistance provided in response to a natural disaster.
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