H.R. 4572 – Government Bailout Prevention Act

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Updated April 14, 2026 at 8:32 AM UTC

The Government Bailout Prevention Act aims to stop the federal government, including the Treasury and Federal Reserve, from using any funds to bail out state, municipal, local, or county governments that have declared bankruptcy, defaulted on their debts, or are likely to default. It blocks federal purchases, guarantees, loans, and grants for such entities, except when aid is needed for a declared disaster. The bill applies to all U.S. states, the District of Columbia, and U.S. territories.

Key Provisions

Defines “State” to include all U.S. states, the District of Columbia, and U.S. territories.
Bars any federal money from being used to buy, guarantee, lend to, or grant aid for obligations of any state, municipal, local, or county government that has filed for bankruptcy, defaulted, is at risk of default, or would likely default without U.S. help (effective for events on or after Jan. 1, 2019).
Prohibits the Treasury Department from using its general funds or borrowed funds to purchase, guarantee, or otherwise assist the same defaulting governments.
Stops Federal Reserve Banks from providing loans, guarantees, credits, or buying bonds of any taxing or bonding authority that is in default or at risk of default.
Excludes assistance that is provided in response to a declared disaster.
Clarifies that the ban covers debt restructuring and related actions, but does not apply to discretionary appropriations, direct spending, or other grants awarded to the affected governments.

Legislative Activity

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HouseIntro Referral Latest Action

Referred to the Committee on Oversight and 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.

Oversight and Government Reform Committee

September 27, 2019

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HouseIntro Referral

Introduced in House

September 27, 2019

HouseIntro Referral

Referred to the Committee on Oversight and 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.

Oversight and Government Reform Committee

September 27, 2019

Bill Text

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Introduced in HouseIssued September 27, 2019

I

116th CONGRESS

1st Session

H. R. 4572

IN THE HOUSE OF REPRESENTATIVES

September 27, 2019

Mr. Rooney of Florida introduced the following bill; which was referred to the Committee on Oversight and 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

A BILL

To prohibit the provision of Federal funds to State and local governments for payment of obligations, to prohibit the Federal Reserve Banks, the Department of the Treasury, and other Federal agencies from financially assisting State and local governments that have defaulted on their obligations, and for other purposes.

1.

Short title

This Act may be cited as the Government Bailout Prevention Act.

2.

Definition

In this Act, the term State means—

(1)

any of the several States;

(2)

the District of Columbia; and

(3)

any territory or possession of the United States.

3.

Prohibition on the use of Federal funds to pay or guarantee State and local obligations

(a)

In general

Notwithstanding any other provision of law, no Federal funds may be used to purchase or guarantee obligations of, issue lines of credit to, or provide direct or indirect grants-and-aid to, any State government, municipal government, local government, or county government which, on or after January 1, 2019, has filed for bankruptcy, has defaulted on its obligations, is at risk of defaulting, or is likely to default, absent such assistance from the United States Government.

(b)

Limit on Use of Borrowed Funds

The Secretary of the Treasury shall not, directly or indirectly, use general fund revenues or funds borrowed pursuant to title 31, United States Code, to purchase or guarantee any asset or obligation of any State government, municipal government, local government, or county government, or otherwise to assist such government entity, if, on or after January 1, 2019, that State government, municipal government, or county government has defaulted on its obligations, has filed for bankruptcy, is at risk of defaulting, or is likely to default, absent such assistance from the United States Government.

(c)

Prohibition on Federal Reserve assistance

Notwithstanding any other provision of law, no Federal Reserve Bank may provide or extend to, or authorize with respect to, any State government, municipal government, local government, county government, or other entity that has taxing authority or bonding authority, any funds, loan guarantees, credits, or any other financial instrument, including the purchasing of the bonds of such State, municipality, locality, county, or other bonding authority, or to otherwise assist such government entity under any authority of any Federal Reserve Bank.

(d)

Limitation

Subsections (a) through (c) shall not apply to Federal assistance provided in response to a declared disaster.

4.

Applicability

The prohibition under section 3—

(1)

includes debt restructuring or any other related activity; and

(2)

does not include—

(A)

any discretionary appropriations or direct spending, as those terms are defined in section 250(c) of the Balanced Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 900(c)); and

(B)

any grant awarded by the United States to the State government, municipal government, local government, or county government.