The Federal Reserve Act, passed in 1913, created the Federal Reserve; a quasi-governmental entity whose chairman is appointed by the President and approved by the Congress. They work with the US Treasury to regulate the banking industry and provide credit to the banking system. The Federal Reserve was created, in part, to be a lender of last resort in an attempt to stabilize the banking system that had fairly frequent banking panics (bank runs) in the late 1800s and early in the 1900s. The panics caused economic downturns.
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Booms and Busts Due to Federal Reserve
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The Federal Reserve Act, passed in 1913, created the Federal Reserve; a quasi-governmental entity whose chairman is appointed by the President and approved by the Congress. They work with the US Treasury to regulate the banking industry and provide credit to the banking system. The Federal Reserve was created, in part, to be a lender of last resort in an attempt to stabilize the banking system that had fairly frequent banking panics (bank runs) in the late 1800s and early in the 1900s. The panics caused economic downturns.