H.R. 9324 — Government Bailout Prevention Act

This section prohibits the use of Federal funds to purchase or guarantee obligations of, issue lines of credit to, or provide grants or other assistance to any State, municipal, local, county government, or school district that has filed for bankruptcy, defaulted on its obligations, or is at risk of defaulting on or after January 1, 2026. It also bars the Federal Reserve from extending funds, loan guarantees, or other financial instruments to such entities, except for assistance provided in response to a declared disaster.

This section clarifies that the prohibition in section 3 covers debt restructuring and any related activity but excludes discretionary appropriations, direct spending, and grants awarded by the United States to state, municipal, local, county, or school district governments.