In the United States the Federal Reserve serves as the lender of last resort to those institutions that cannot obtain credit elsewhere and the collapse of which would have serious implications for the economy. It took over this role from the private sector "clearing houses" which operated during the Free Banking Era; whether public or private, the availability of liquidity was intended to prevent ’runs’ on the banking system. In the United Kingdom this role is undertaken by the Bank of England, the central bank of the United Kingdom.
HSBC is an example of a non-central bank that has acted as a lender of last resort on several occasions.
This term can be applied to criminal loan sharks who act as lenders of last resort, offering loans at very high rates of interest (considered by many as usury). This may be illegal in itself, or involve intimidation to ensure repayment.
These moneylenders are not the only lenders of last resort dealing with the public. In some cases, credit is available for the purchase of specific goods which could not be sold for cash. Particularly in car financing, there are large companies specializing in the arrangement of credit for high risk individuals.
A more theoretical critique of the institution of a lender of last resort is that its existence is predicated on the possibility of a "market failure": if the credit market accurately assesses risks then institutions not able to receive loans would not be able to misuse the capital and the idea of a panic or ‘contagious’ credit crunch spreading through the banking system would be impossible.
A modern critique of the International Monetary Fund as the international lender of last resort is that it is effectively an inefficient subsidy system, since it is mandated to provide loans to countries unable to raise funds through the bond market, with loans paying below market interest rates. Critics say that this has two deficiencies as a means of charity: one, it confuses the ability to repay with the economic reorganization demanded by the bank and other ethical considerations; and two, the fact that some countries actually do repay their loans, despite the hardship of paying and the reality that most developing nations are not expected to do so.