The Fed and JP Morgan announce they will provide funding to Bear Stearns.  The Fed will back JP Morgan via the Discount Window.  The initial period is for 28 days.

The steps that are taking place are extraordinary and reflect the concerns about the fragility of the conditions in the credit markets.  It may seem that JP Morgan is bailing out Bear Stearns, but the Fed is really doing the bail out.   The reason - no one will extend credit to Bear Stearns.  JP Morgan just said they will be a conduit for the Fed and the HOPE is someone else will extend credit after 28 days.  What bank would lend to them in these markets?  

So what is so important about Bear Stearns?  The repercussions from Bear going out of business would cause more problems.   The securities that Bear owns would be put up for sale and there is no market for the securities that Bear owns or others for that matter. 

My question is what happens when the next place has a problem?