Wall Street investment bank Bear Stearns Companies Inc. has secured emergency funding from rival J.P. Morgan Chase & Co.

Bear Stearns announced today it reached an agreement with J.P. Morgan to provide a secured loan facility for an initial period of up to 28 days allowing Bear Stearns to access liquidity as needed.

Bear Stearns also announced that it is talking with J.P. Morgan Chase, regarding permanent financing or other alternatives.

Alan Schwartz, president and chief executive officer of the firm, stated, “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. Nevertheless, 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.”

The company added that it can’t guarantee that any strategic alternatives will be successfully completed.

J.P. Morgan noted that the Federal Reserve Bank of New York agreed to provide non-recourse, back-to-back financing to J.P. Morgan, as part of the deal. As a result, “J.P. Morgan Chase does not believe this transaction exposes its shareholders to any material risk.”

The U.S. Federal Reserve said “it is monitoring market developments closely and will continue to provide liquidity as necessary to promote the orderly functioning of the financial system.”

The board voted unanimously to approve the arrangement announced by J.P. Morgan Chase and Bear Stearns this morning.

Nervousness of the situation at Bear Stearns prompted drops of more than 200 points on both the NYSE and the TSX.

At 10:41 am ET, the S&P/TSX composite index was down 164 at 13,278. The Dow Jones industrial average shed 191 points to reach 11,954.