Hey California, You’re Welcome!

It seems unlimited bailouts are still available to states (hehem California).  An amendment limiting them from Senator Gregg (R-NH) did not pass. So, everyone in California should be sending handwritten notes to everyone they know in all of the states (except New Hampshire), thanking them for saving your ass. You can also send your love letters to Senator Gregg.

From Senatus:

An amendment offered by Senator Judd Gregg (R-NH) to the Restoring American Financial Stability Act (S. 3217) has been defeated by a vote of 47-50.  Under a unanimous consent agreement, the amendment required 60 votes to pass.

The amendment aims to prohibit federal funds from being used for state bailouts.  The text:

(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-and-aid to, any State government, municipal government, local government, or county government which has defaulted on its obligations, is at risk of defaulting, or is likely to default, absent such assistance from the United States Government.

(b) 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 the State government, municipal government, or county government has defaulted on its obligations, is at risk of defaulting, or is likely to default, absent such assistance from the United States Government.

(c) Limit on Federal Reserve Funds.—The Board of Governors 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 the State government, municipal government, local government, or county government has defaulted on its obligations, is at risk of defaulting, or is likely to default, absent such assistance from the United States Government. Notwithstanding any other provision of law, no Federal funds may be used to pay the obligations of any State, or to issue a line of credit to any State.

There was also a modification adding a new paragraph to the amendment which would exclude the prohibition of federal government assistance in the event of a natural disaster.

(Hat tip: The Stalwart)