INSTANT VIEW: JPMorgan provides Bear Stearns funding

NEW YORK (Reuters) - JPMorgan Chase & Co on Friday said it, along with the Federal Reserve Bank of New York, agreed to provide secured funding to Bear Stearns, as necessary, for up to 28 days.

KEY POINTS: * The Fed, through its discount window, will provide non-recourse, back-to-back financing to JPMorgan Chase, the commercial bank said. JPMorgan said it does not believe this transaction exposes its shareholders to any material risk. * JPMorgan Chase also said it is working with Bear Stearns on securing permanent financing or other alternatives for the company. * Alan Schwartz, president and chief executive officer of Bear Stearns, said: "Bear Stearns has been the subject of a multitude of market rumors 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. We took this important step to restore confidence in us in the marketplace, strengthen our liquidity and allow us to continue normal operations." COMMENTS:

JUSTIN URQUHART STEWART, DIRECTOR AT 7 INVESTMENT

MANAGEMENT, LONDON:

"The Fed and everyone are taking action to make sure this one doesn't fail. Here is a big difference with Britain ... on how to handle a bank in difficulties. You actually organize your support before you actually go public, unlike Northern Rock.

"They are very keen to make sure this one doesn't go. Bear Stearns is too big an international name."

"There is obviously the concern (of more banks in trouble) but ... they will make sure there is a package to make sure this one is OK. I think they will let smaller one goes but big name like this internationally will absolutely not."

STEPHEN DOWDS, HEAD OF INTERNATIONAL EQUITIES, NORTHERN

TRUST:

This tells you we're not over the worst yet, and there are still some players out there who are vulnerable. We expect more transparency next week when we get results from the U.S. financial sector.

I don't think the central banks see themselves as there to support anyone and everyone who gets into trouble -- they're there to support the system."

MEHERNOSH ENGINEER, CREDIT STRATEGIST, BNP PARIBAS:

"This is not good. It seems all the counterparties to Bear may have pulled all the liquidity lines and therefore they were forced to go to the Fed. Therefore JP Morgan is a kind of a ghost intermediate entity."

"We're now back to 154 basis points on the iTraxx Europe index as markets have realized this is very bad news."

JAMES MCGLYNN, PORTFOLIO MANAGER, SUMMIT INVESTMENT

PARTNERS, SOUTHLAKE, TEXAS:

"What happens to their (Bear Stearns') book value from here? It could make them a great takeover target. The question is the quality of their actual book. Is it too unknown to deal with or is it measurable? JPMorgan will step in and get a real good look."

"It is possible" that JPMorgan could be looking for an acquisition, he said.

JPMorgan's "powder is dry, Bear Stearns is small, and it wouldn't destroy JPMorgan. It's not like it would be a merger of equals."

BILL O'NEILL, MANAGING PARTNER, LOGIC ADVISORS, UPPER

SADDLE RIVER, NEW JERSEY:

"It is indicative of how serious the financial crisis is, and the impact that it has on financial firms in the whole financial arena.

"This is not a positive thing in my view. This is indicative of the kind of crisis that we are in. I do view this as bullish for hard assets."

MICHAEL KLAWITTER, CURRENCY STRATEGIST, DRESDNER KLEINWORT,

FRANKFURT:

"The situation is very much that Bear Stearns was very close to the edge and it was much worse than we all thought. It raises severe concerns over other banks. (Bear Stearns) wasn't a small bank, it was the second largest underwriter of mortgages last year. For the situation to deteriorate in that way is not good news and it will add further to jitters."

MICHAEL KLAWITTER, CURRENCY STRATEGIST AT DRESDNER

KLEINWORT, FRANKFURT:

"The situation is very much that Bear Stearns was very close to the edge and it was much worse than we all thought. It raises severe concerns over other banks. (Bear Stearns) wasn't a small bank, it was the second largest underwriter of mortgages last year. For the situation to deteriorate in that way is not good news and it will add further to jitters."

JANE CARON, SENIOR VICE PRESIDENT AND CHIEF ECONOMIC

STRATEGIST, DWIGHT ASSET MANAGEMENT, BURLINGTON, VERMONT:

"The market chatter about liquidity risk has actually resulted in a run on the bank against Bear Stearns. Investors pulled their repo lines with Bear Stearns. So even if they weren't in a liquidity crisis before, the rumors became self-fulfilling. The fact that JPMorgan Chase is brokering a line of credit for Bear Stearns via the discount window probably demonstrates that Bear Stearns does not have any qualifying collateral that they can part with at this time to go to the Fed's discount window directly. It's positive that JPMorgan Chase is helping to work out this situation because the collapse of a major financial institution would obviously exacerbate the credit crisis."

PAUL NOLTE, DIRECTOR OF INVESTMENTS, HINSDALE ASSOCIATES,

HINSDALE, ILLINOIS:

"This mitigates some of the bad news on Bear Stearns.

But while it's good news, it does show that Bear Stearns must be really hurting. If two weeks ago they said everything was fine and now they need funding, obviously there's something else there."

TOM SOWANICK, CHIEF INVESTMENT OFFICER, CLEARBROOK FINANCIAL

LLC, PRINCETON, NEW JERSEY:

"Another piece of mistrust. The CFO yesterday said fears of liquidity concerns are overblown. He said that in the Wall Street Journal. But what happened in 24 hours that they didn't know 24 hours ago? But overnight, the company needed a government bail out."

GIRI CHERUKURI, HEAD TRADER AT OAKBROOK INVESTMENTS LLC, IN

LISLE, ILLINOIS:

"On the one hand it says Bear Stearns was in big trouble, but on the other hand this should solve the problem for them. It helps ensure stability for whole financial system." MARKET REACTION: * BONDS: Treasuries initially dropped but quickly recovered. * CURRENCIES: The dollar fell against the euro. * STOCKS: U.S. equity indexes fell.