A bill to prohibit taxpayer bailouts of fiscally irresponsible State and local governments.

Prohibits the use of federal funds to purchase or guarantee obligations of, issue lines of credit to or provide direct or indirect grants-and-aid to, any state, municipal, local, or county government which a nationally recognized statistical rating organization has determined has defaulted on its obligations or is likely to default, without such federal assistance.

Prohibits the Secretary of the Treasury from using, directly or indirectly, general fund revenues or borrowed funds to purchase or guarantee any asset or obligation of any such state, municipal, local, or county government.

Prohibits the Board of Governors of the Federal Reserve System from directly or indirectly lending against, purchasing, or guaranteeing any asset or obligation of such a state, municipal, local, or county government.