Government Bailout Prevention Act
- Bill Number
- H.R. 9324
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Policy Area
- Economics and Public Finance
- Status
- Introduced
- Latest Action
- 2026-06-15: Referred to the Committee on Oversight and Government Reform, and in addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- Last Updated
- 2026-07-06T18:45:45Z
AI-Generated Summary
Purpose This legislation seeks to prevent the federal government from providing financial assistance to state, local, and school district governments that default on their debts or face bankruptcy after January 1, 2026.
Key provisions
- Prohibition on federal assistance: No federal funds may be used to buy, guarantee, or provide credit lines for obligations of any state, municipal, county, local government, or school district that has defaulted, filed for bankruptcy, or is at risk of defaulting.
- Treasury restrictions: The Secretary of the Treasury may not use general revenues or borrowed funds to assist such entities.
- Federal Reserve limits: Federal Reserve banks are barred from offering loans, guarantees, or other financial support, including buying bonds, to these governments.
- Disaster exception: The rules do not apply to assistance given after a declared disaster.
- Scope: The ban covers debt restructuring but excludes routine federal grants, discretionary spending, and direct spending programs.
Significant changes to existing law This bill adds new restrictions that limit federal intervention in state and local debt crises, overriding other laws that might otherwise allow such support. It creates a clear cutoff date of January 1, 2026, for the prohibitions to begin.
Potential impacts
- Government agencies: Restricts the Department of the Treasury, Federal Reserve, and other agencies from offering financial aid to distressed state and local entities.
- Citizens: Could lead to reduced services or higher local taxes if governments default without federal help.
- International relations: Minimal direct effects, as the focus is on domestic fiscal policy.
Main stakeholders affected
- State, municipal, county, and local governments.
- School districts.
- Federal agencies including the Treasury and Federal Reserve.
- Taxpayers and bondholders connected to these entities.
Notable legal, constitutional, or political implications The measure strengthens limits on federal involvement in subnational finances, potentially reinforcing principles of fiscal responsibility at the state and local level while raising questions about the balance of power between federal and state governments.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Rep. Steube, W. Gregory [R-FL-17]
Cosponsors (3)
Rep. Perry, Scott [R-PA-10], Rep. Self, Keith [R-TX-3], Rep. Harrigan, Pat [R-NC-10]
Recent Actions
- 2026-06-15: Referred to the Committee on Oversight and Government Reform, and in addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- 2026-06-15: Referred to the Committee on Oversight and Government Reform, and in addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- 2026-06-15: Introduced in House
- 2026-06-15: Introduced in House
Bill Versions
- Government Bailout Prevention Act — issued 2026-06-15 — PDF (4 pages)