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The emergency cash will be available to Bear Stearns for 28 days and as necessary, JP Morgan Chase said.
JP Morgan Chase was also looking at how to provide long-term financing to Bear Stearns, the Wall Street bank said.
Bear Stearns has been at the centre of the mortgage debt crisis that started in the US, spread to world markets, and creating a global credit crunch.
Recently there has speculation that the lender was struggling to finance its business.
Alan Schwartz, president and chief executive officer of Bear Stearns, said: "Bear Stearns has been the subject of a multitude of market rumours regarding our liquidity.
"We have tried to confront and dispel these rumors and parse fact from fiction.
"Amidst this market chatter, our liquidity position in the last 24 hours had significantly deteriorated," he added.
"We took this important step to restore confidence in us in the marketplace, strengthen our liquidity and allow us to continue normal operations."
(BBC)
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