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The emergency funding will be available to Bear Stearns “as necessary,” JPMorgan Chase said in a statement.

The Fed, through its discount window, will provide financing to JPMorgan Chase. JPMorgan Chase said it did not believe this transaction exposes its shareholders to “any material risk.”

JPMorgan Chase said it was working closely with Bear Stearns on securing permanent financing or other alternatives for the bank, which has been battered by a global credit crunch and the US housing slump.

The Wall Street investment bank has sustained hundreds of millions of dollars in losses in the mortgage-related credit crisis that erupted in mid-2007.

Bear Stearns confirmed that it has agreed to a secured loan facility for up to 28 days with JPMorgan Chase. The company said it was in talks with JPMorgan about permanent financing or other alternatives.

The company said its liquidity position had “significantly deteriorated” in the last 24 hours.

“Bear Stearns has been the subject of a multitude of market rumors regarding our liquidity,” said Alan Schwartz, the company’s president and chief executive.

“We have tried to confront and dispel these rumors and parse fact from fiction. Nevertheless, amidst this market chatter, our liquidity position in the last 24 hours had significantly deteriorated,” he said.

“We took this important step to restore confidence in us in the marketplace, strengthen our liquidity and allow us to continue normal operations,” the Bear Stearns executive said.