Is the Federal Reserve known as, "the lender of last resort"?

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How is The Federal Reserve Bank Known As “The Lender of Last Resort?”
The Federal Reserve Bank holds significant responsibilities to ensure economic stability. In particular, it is also called the Central Bank. Without this federal organization, regulating and controlling the economy and money circulation would be a difficult task for the government. Since economic problems are inevitable, the Federal Reserve Bank eradicates many of these challenges by working in close collaboration with the Congress. However, it is vital to note that the Central Bank is an independent institution and make decisions without the influence of government officials. The Federal Reserve Bank is also called “the lender of last resort (LOLR).” The last-resort lending responsibility was introduced in the 18th centuries after panics and fears that engulfed banking institutions. Notably, all commercial banks are required to have a reserve with the Central Bank. Being the LOLR, the Federal Reserve Bank offers liquidity to banking institutions that are facing financial difficulties to stabilize the economy.
Some of the primary functions of the Federal Reserve Bank include regulating, supervising, and controlling bank operations. Others are maintaining a reliable and effective payment system and establishing appropriate monetary policies. As a LOLR, the Central Bank keeps an eye on the financial institutions to ensure that they partake their responsibilities well to enhance economic growth and expansion. However, stabilizing the economy is more than monitoring the financial system (Tucker 12). In some cases, the banking institutions require financial boost so that they can overcome various challenges. Besides, individuals who want loans from banks must first open an account and perform various transactions up to a particular amount before they get credits. Similarly, the commercial banks have reserves with the Federal Reserve Bank so that they can ask for financial assistance when the need arises. In the 1800s, financial panics resulted in the closure of many banking institutions. When people no longer trust the banks to keep their money, they usually withdraw it. As many individuals get their funds from the financial institutions, it becomes hard for the banks to continue operating since they do not have all depositors’ money at hand. Such panics have detrimental effects on the economy, and that is the reason why the Federal Reserve Bank comes in to regulate the flow of money.
Being the LOLR enabled the United States of America (USA) to overcome the Great Depression of 1929 and the Economic Recession of 2008. During the Great Depression, the most significant thing that deteriorated the situation was people withdrawing more money from the banks since they longer trusted them to keep it. As many Americans invested their savings in the stock market, the supply of money was not enough, increasing unsold products. Although the stock prices continued to rise, the rate of production decreased since consumers could no longer afford to buy many goods as before. The majority of Americans bought things in credit since their employers delayed their wages and others shut down their businesses. Those with money in the banks lost their confidence in financial institutions solvency and demanded cash (Dobler et al. 13). For this reason, banks were obliged to liquidate their assets to supplement the need of their customers. The Economic Recession of 2008 was almost similar to the Great Depression. The only difference is that the Federal Reserve Bank intervened and saved commercial banks by crediting them. Besides, some of the investment institutions such as Morgan Stanley and Lehman Brothers were going bankrupt before the intervention by the Central Bank. Therefore, the Federal Reserve Bank, as the LOLR, enabled the economy of the USA to rise on its feet again after facing significant challenges.
Paul Tucker asserts that there exist four most significant concepts that shape the Federal Reserve Bank’s role as the LOLR. They include “fiscal carve-out,” time consistency, adverse selection, and moral hazard (Tucker 11). These factors create the environment through which the Central Bank operates. For instance, time consistency enables the Federal Reserve Bank to lend money to commercial inst...