Government Bailout Prevention Act

The Government Bailout Prevention Act prohibits the use of federal funds, Treasury resources, or Federal Reserve assistance to support state, local, or school district governments facing financial distress starting January 1, 2026. Specifically, the bill bars the government from purchasing or guaranteeing debt for entities that have filed for bankruptcy, defaulted on obligations, or are at risk of defaulting without such help. This restriction also covers debt restructuring activities but includes an exception for financial aid provided in response to declared disasters.