Republicans in the U.S. Senate want to make sure the federal government does not become involved in the financial maelstrom hitting Detroit, which filed for the largest municipal bankruptcy in U.S. history last week, Reuters reported yesterday. They have proposed at least three “No Bailout” amendments to spending bills that the Senate is currently considering, all of which would limit the U.S. government's ability to help cities in fiscal crisis. Even though the amendments will likely fail in the Democrat-dominated chamber, cities and counties are alarmed by legislation they say that could jeopardize funding for hundreds of local governments and are pushing back. Sen. Lindsey Graham (R-S.C.) yesterday introduced an amendment to a financial services and general spending bill that would bar the use of federal funds to buy or guarantee a municipal asset or obligation from a locality that has defaulted or is at risk of defaulting. It also would prohibit the U.S. government from issuing lines of credit to those municipalities or providing other aid to prevent bankruptcy.
