I 

116TH CONGRESS 

1ST SESSION H. R. 4572 

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. 

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


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•HR 4572 IH

1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Government Bailout 

3 Prevention Act’’. 

4 SEC. 2. DEFINITION. 

5 In this Act, the term ‘‘State’’ means— 

6 (1) any of the several States; 

7 (2) the District of Columbia; and 

8 (3) any territory or possession of the United 

9 States. 

10 SEC. 3. PROHIBITION ON THE USE OF FEDERAL FUNDS TO 

11 PAY OR GUARANTEE STATE AND LOCAL OBLI12 GATIONS. 

13 (a) IN GENERAL.—Notwithstanding any other provi14 sion of law, no Federal funds may be used to purchase 

15 or guarantee obligations of, issue lines of credit to, or pro16 vide direct or indirect grants-and-aid to, any State govern17 ment, municipal government, local government, or county 

18 government which, on or after January 1, 2019, has filed 

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

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

21 from the United States Government. 

22 (b) LIMIT ON USE OF BORROWED FUNDS.—The Sec23 retary of the Treasury shall not, directly or indirectly, use 

24 general fund revenues or funds borrowed pursuant to title 

25 31, United States Code, to purchase or guarantee any 

26 asset or obligation of any State government, municipal 


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•HR 4572 IH

1 government, local government, or county government, or 

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

3 January 1, 2019, that State government, municipal gov4 ernment, or county government has defaulted on its obli5 gations, has filed for bankruptcy, is at risk of defaulting, 

6 or is likely to default, absent such assistance from the 

7 United States Government. 

8 (c) PROHIBITION ON FEDERAL RESERVE ASSIST9 ANCE.—Notwithstanding any other provision of law, no 

10 Federal Reserve Bank may provide or extend to, or au11 thorize with respect to, any State government, municipal 

12 government, local government, county government, or 

13 other entity that has taxing authority or bonding author14 ity, any funds, loan guarantees, credits, or any other fi15 nancial instrument, including the purchasing of the bonds 

16 of such State, municipality, locality, county, or other bond17 ing authority, or to otherwise assist such government enti18 ty under any authority of any Federal Reserve Bank. 

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

20 not apply to Federal assistance provided in response to 

21 a declared disaster. 

22 SEC. 4. APPLICABILITY. 

23 The prohibition under section 3— 

24 (1) includes debt restructuring or any other re25 lated activity; and 


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1 (2) does not include— 

2 (A) any discretionary appropriations or di3 rect spending, as those terms are defined in 

4 section 250(c) of the Balanced Budget and 

5 Emergency Deficit Control Act of 1985 (2 

6 U.S.C. 900(c)); and 

7 (B) any grant awarded by the United 

8 States to the State government, municipal gov9 ernment, local government, or county govern10 ment. 

Æ 


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