As lenders of last resort
, central banks typically respond by lending to banks that are illiquid but solvent, against good collateral.
Central banks operating in their function as lenders of last resort
can function, however, only within certain limits.
The House approved the Ensuring Continued Access to Student Loans Act of 2008 which would authorize the Department of Education to advance federal funds to guarantee agencies operating as lenders of last resort
that lack money for new loans.
Secretary of Education the authority to advance federal funds to guaranty agencies operating as lenders of last resort
if they do not have sufficient capital to originate new loans, and the temporary authority to purchase loans from lenders in the federal guaranteed loan program.