Government Bailout Prevention Act
Sponsored By: Representative Steube, W. Gregory [R-FL-17]
Introduced
Summary
Would ban federal bailouts for states, localities, and school districts facing bankruptcy or likely default. The bill would block Treasury funds, borrowed money, purchases or guarantees, and Federal Reserve interventions to rescue these governments except for declared disaster aid.
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- State and local governments and school districts would be barred from receiving federal payments, guarantees, bond purchases, or lines of credit if they have filed for bankruptcy, defaulted, are at risk of default, or are likely to default on or after January 1, 2026. The prohibition would cover direct and indirect grants-and-aid, purchases or guarantees of obligations, and issuance of lines of credit.
- Federal Reserve banks would be prohibited from providing funds, loan guarantees, credits, buying state or local bonds, or using any other financial instrument to assist those governments under any Fed authority. That includes purchases of bonds issued by state, municipal, local, or school-district bonding authorities.
- The ban would include debt restructuring and related activities but would not apply to federal assistance provided in response to a declared disaster. The measure also would not apply to discretionary appropriations, direct spending as defined in law, or any federal grant awarded to a State, municipal, local, county government, or school district.
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Bill Overview
Analyzed Economic Effects
1 provisions identified: 0 benefits, 0 costs, 1 mixed.
Ban most federal bailouts for governments
If enacted, this bill would ban most Federal help to state, local, and school governments that, on or after January 1, 2026, file for bankruptcy, default, are at risk of default, or are likely to default. It would bar Federal funds from buying or guaranteeing their debt, issuing lines of credit, or giving direct or indirect grants. The Secretary of the Treasury and any Federal Reserve bank would be prohibited from buying or guaranteeing their obligations or otherwise assisting them. Exceptions would include discretionary appropriations and direct spending as defined in 2 U.S.C. 900(c), grants awarded by the United States, and Federal assistance after a declared disaster. The bill would also define "State" to include the District of Columbia and U.S. territories and possessions, taking effect upon enactment.
Sponsors & CoSponsors
Sponsor
Steube, W. Gregory [R-FL-17]
FL • R
Cosponsors
Rep. Perry, Scott [R-PA-10]
PA • R
Sponsored 6/15/2026
Rep. Self, Keith [R-TX-3]
TX • R
Sponsored 6/15/2026
Rep. Harrigan, Pat [R-NC-10]
NC • R
Sponsored 6/24/2026
Roll Call Votes
No roll call votes available for this bill.
View on Congress.gov