To help facilitate the deal, the Federal Reserve is taking the extraordinary step of providing as much as $30 billion in financing for Bear Stearns's less-liquid assets, such as mortgage securities that the firm has been unable to sell, in what is believed to be the largest Fed advance on record to a single company. Fed officials wouldn't describe the exact financing terms or assets involved. But if those assets decline in value, the Fed would bear any loss, not J.P. Morgan.
Note that last sentence means the U.S. government (i.e., ultimately every taxpayer) is on the hook for that $30 billion.
Bear couldn't cover their margin calls (http://en.wikipedia.org/wiki/Margin_call#Margin_call).
And now the Fed has helped or guaranteed those investments so that JP Morgan can buy them for $2 a share.
JPM wasn't going to touch Bear's liabilities without some guarantees from the Fed.
Details of the plan haven't been released, but here's a pertinent quote from the Journal (http://online.wsj.com/article/SB120569598608739825.html?mod=...):
To help facilitate the deal, the Federal Reserve is taking the extraordinary step of providing as much as $30 billion in financing for Bear Stearns's less-liquid assets, such as mortgage securities that the firm has been unable to sell, in what is believed to be the largest Fed advance on record to a single company. Fed officials wouldn't describe the exact financing terms or assets involved. But if those assets decline in value, the Fed would bear any loss, not J.P. Morgan.
Note that last sentence means the U.S. government (i.e., ultimately every taxpayer) is on the hook for that $30 billion.