Government Bailout Prevention Act
Sponsored By: Senator Young, Todd [R-IN]
Introduced
Summary
Ban federal bailout support for State and local governments. This bill would bar federal agencies from buying, guaranteeing, or lending to States, municipalities, counties, and school districts that have defaulted, filed for bankruptcy, or are at risk of default on or after January 1, 2026.
Show full summary
- State, municipal, county, and school district finances: These governments could not receive federal purchases, guarantees, lines of credit, or other federal financial support if they have defaulted, filed for bankruptcy, or are likely to default on or after Jan 1, 2026.
- U.S. Treasury limits: The Secretary of the Treasury would be prohibited from using general fund revenues or funds borrowed under title 31 to buy or guarantee assets of, or otherwise assist, those governments.
- Federal Reserve restrictions: Federal Reserve banks would be barred from lending to, guaranteeing, buying bonds of, or otherwise extending credit or financial instruments to those governments or entities with taxing or bonding authority.
- Scope and exceptions: The prohibition covers debt restructuring and related activities. It would not apply to federal assistance for a declared disaster and does not include discretionary appropriations, direct spending, or any grant awarded by the United States.
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Bill Overview
Analyzed Economic Effects
1 provisions identified: 0 benefits, 0 costs, 1 mixed.
Limits on federal bailouts for governments
If enacted, this bill would bar many federal backstops for state, local, county, municipal governments, and school districts on or after January 1, 2026. It would stop Treasury use of general fund money or funds borrowed under title 31 to buy or guarantee those governments' assets or obligations. It would also bar Federal Reserve banks from lending to, guaranteeing, or buying bonds of those governments, and it would cover debt restructuring and related actions. The bill would not stop ordinary federal grants or discretionary appropriations defined in 2 U.S.C. 900(c). Subsections (a) through (c) would not apply to federal assistance provided in response to a declared disaster, so disaster-response aid would still be allowed.
Sponsors & CoSponsors
Sponsor
Young, Todd [R-IN]
IN • R
Cosponsors
Sen. Cotton, Tom [R-AR]
AR • R
Sponsored 5/21/2026
Sen. Marshall, Roger [R-KS]
KS • R
Sponsored 6/9/2026
Sen. Crapo, Mike [R-ID]
ID • R
Sponsored 6/9/2026
Sen. Sheehy, Tim [R-MT]
MT • R
Sponsored 6/9/2026
Sen. Cornyn, John [R-TX]
TX • R
Sponsored 6/18/2026
Sen. Graham, Lindsey [R-SC]
SC • R
Sponsored 6/24/2026
Roll Call Votes
No roll call votes available for this bill.
View on Congress.gov