II 112th CONGRESS 1st Session S. 184 IN THE SENATE OF THE UNITED STATES January 25 (legislative day, January 5), 2011 Mr. Ensign introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs A BILL To prohibit taxpayer bailouts of fiscally irresponsible State and local governments.

1.

Prohibition on the use of Federal funds to pay State obligations

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-and-aid to, any State government, municipal government, local government, or county government which a nationally recognized statistical rating organization has determined has defaulted on its obligations or is likely to default, absent such assistance from the United States Government.

2.

Limit on use of borrowed funds

The Secretary 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 to otherwise assist such governments, in any instance in which a nationally recognized statistical rating organization has determined that the State government, municipal government, local government, or county government has defaulted on its obligations or is likely to default, absent such assistance from the United States Government.

3.

Limit on Federal Reserve funds

The Board of Governors of the Federal Reserve System shall not, directly or indirectly, lend against, purchase, or guarantee any asset or obligation of any State government, municipal government, local government, or county government or to otherwise assist such governments, in any instance in which a nationally recognized statistical rating organization has determined that the State government, municipal government, local government, or county government has defaulted on its obligations or is likely to default, absent such assistance from the United States Government.