No Bailouts for State and local Governments Act

To prohibit the provision of Federal funds to State 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. Short title This Act may be cited as the No Bailouts for State and local Governments Act 2. Prohibition on the use of Federal funds to pay 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-in-aid to any State government, municipal government, local government, or county government which, on or after January 1, 2013, 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, if such purchase, guarantee, extension of credit, or grant is made for the purpose of assisting the government in— (1) avoiding defaulting on the payment of principal or interest due on an obligation of the government; or (2) curing such a default. (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, 2013, that State government, municipal government, or county government has filed for bankruptcy, defaulted on its obligations, is at risk of defaulting, or is likely to default, absent such assistance from the United States Government, if such purchase, guarantee, extension of credit, or grant is made for the purpose of assisting the government in— (1) avoiding defaulting on the payment of principal or interest due on an obligation of the government; or (2) curing such a default. (c) Prohibition on Federal Reserve assistance Notwithstanding any other provision of law, the Board of Governors of the Federal Reserve System shall not 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 or other authority, 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 the Board of Governors, if such purchase, guarantee, extension of credit, or grant is made for the purpose of assisting the government in— (1) avoiding defaulting on the payment of principal or interest due on an obligation of the government; or (2) curing such a default. (d) Limitation Subsections (a) through (c) shall not apply to Federal assistance provided in response to a natural disaster.

Summary: No Bailouts for State and local Governments Act - Prohibits the use of federal funds to purchase or guarantee obligations of, issue lines of credit to, or provide direct or indirect grants-in-aid to any state, municipal, local, or county government which, on or after January 1, 2013, has filed for bankruptcy, has defaulted on its obligations, is at risk of defaulting, or is likely to default, without such federal assistance if such purchase, guarantee, extension of credit, or grant is made to assist the government in: (1) avoiding defaulting on the payment of principal or interest due on an obligation of the government, or (2) curing such a default. Prohibits the Secretary of the Treasury from using, directly or indirectly, general fund revenues or borrowed funds to purchase or guarantee, for the same purposes, any asset or obligation of any such state, municipal, local, or county government. Prohibits the Board of Governors of the Federal Reserve System from: (1) providing or extending to, or authorizing with respect to, such a state, municipal, local, or county government, or other entity with taxing authority or bonding authority, for the same purposes, any funds, loan guarantees, credits, or any other financial instrument or other authority, including bond purchases; or (2) otherwise assisting such a government entity, for the same purposes, under any Board authority. Waives the application of this Act for federal assistance provided in response to a natural disaster.