I 

114TH CONGRESS 

2D SESSION H. R. 5276 

To prohibit the provision of Federal funds to State, territory, and local 

governments for payment of obligations, to prohibit the Board of Governors of the Federal Reserve System from financially assisting State 

and local governments, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 18, 2016 

Mr. BARR (for himself, Mr. PITTENGER, Mr. STEWART, Mrs. BLACKBURN, 

Mr. ROKITA, Mr. YODER, Mr. HARRIS, Mr. YOHO, Mr. JENKINS of West 

Virginia, Mr. MEADOWS, Mr. BRIDENSTINE, Mr. STUTZMAN, Mr. 

POMPEO, Mr. MULVANEY, Mr. BRAT, Mr. JODY B. HICE of Georgia, Mr. 

RICE of South Carolina, Mr. BYRNE, Mr. WALKER, Mr. FINCHER, Mr. 

GROTHMAN, Mr. BABIN, Mr. AUSTIN SCOTT of Georgia, and Mrs. LUMMIS) introduced the following bill; which was 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 

A BILL 

To prohibit the provision of Federal funds to State, territory, 

and local governments for payment of obligations, to 

prohibit the Board of Governors of the Federal Reserve 

System from financially assisting State and local governments, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 


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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘No Bailouts for State, 

3 Territory, and Local Governments Act’’. 

4 SEC. 2. PROHIBITION ON THE USE OF FEDERAL FUNDS TO 

5 PAY STATE AND LOCAL OBLIGATIONS. 

6 (a) IN GENERAL.—Notwithstanding any other provi7 sion of law, no Federal funds may be used to purchase 

8 or guarantee obligations of, issue lines of credit to, or pro9 vide direct or indirect grants-in-aid to any State govern10 ment, municipal government, local government, or county 

11 government which, on or after January 1, 2013, has filed 

12 for bankruptcy, has defaulted on its obligations, is at risk 

13 of defaulting, or is likely to default, absent such assistance 

14 from the United States Government, if such purchase, 

15 guarantee, extension of credit, or grant is made for the 

16 purpose of assisting the government in— 

17 (1) avoiding defaulting on the payment of prin18 cipal or interest due on an obligation of the govern19 ment; or 

20 (2) curing such a default. 

21 (b) LIMIT ON USE OF BORROWED FUNDS.—The Sec22 retary of the Treasury shall not, directly or indirectly, use 

23 general fund revenues or funds borrowed pursuant to title 

24 31, United States Code, to purchase or guarantee any 

25 asset or obligation of any State government, municipal 

26 government, local government, or county government, or 


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1 otherwise to assist such government entity, if, on or after 

2 January 1, 2013, that State government, municipal gov3 ernment, or county government has filed for bankruptcy, 

4 defaulted on its obligations, is at risk of defaulting, or is 

5 likely to default, absent such assistance from the United 

6 States Government, if such purchase, guarantee, extension 

7 of credit, or grant is made for the purpose of assisting 

8 the government in— 

9 (1) avoiding defaulting on the payment of prin10 cipal or interest due on an obligation of the govern11 ment; or 

12 (2) curing such a default. 

13 (c) PROHIBITION ON FEDERAL RESERVE ASSIST14 ANCE.—Notwithstanding any other provision of law, the 

15 Board of Governors of the Federal Reserve System shall 

16 not provide or extend to, or authorize with respect to, any 

17 State government, municipal government, local govern18 ment, county government, or other entity that has taxing 

19 authority or bonding authority, any funds, loan guaran20 tees, credits, or any other financial instrument or other 

21 authority, including the purchasing of the bonds of such 

22 State, municipality, locality, county, or other bonding au23 thority, or to otherwise assist such government entity 

24 under any authority of the Board of Governors, if such 


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1 purchase, guarantee, extension of credit, or grant is made 

2 for the purpose of assisting the government in— 

3 (1) avoiding defaulting on the payment of prin4 cipal or interest due on an obligation of the govern5 ment; or 

6 (2) curing such a default. 

7 (d) LIMITATION.—Subsections (a) through (c) shall 

8 not apply to Federal assistance provided in response to 

9 a natural disaster. 

10 (e) STATE DEFINED.—For purposes of this section, 

11 the term ‘‘State’’ means any of the several States, the Dis12 trict of Columbia, and any territory or possession of the 

13 United States. 

Æ 


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