The Federal Reserve pledged Friday “to provide liquidity as necessary to promote the orderly functioning of the financial system” as it approved emergency funding for investment giant Bear Stearns. The US central bank confirmed an arrangement in which it would provide credit to the Wall Street firm, which said its liquidity was deteriorating, through banking group JP Morgan Chase. “The Federal Reserve is monitoring market developments closely and will continue to provide liquidity as necessary to promote the orderly functioning of the financial system,” the Fed statement said. “The (Federal Reserve) Board voted unanimously to approve the arrangement announced by JP Morgan Chase and Bear Stearns this morning.” In New York, US investment giant Bear Stearns, citing a potential cash crunch, said Friday it was getting an emergency loan from JPMorgan Chase in coordination with the Federal Reserve Bank of New York. The company said its liquidity position had “significantly deteriorated” in the last 24 hours, forcing it to seek aid. “Bear Stearns has been the subject of a multitude of market rumors regarding our liquidity,” said Alan Schwartz, the company's president and chief executive. “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,” he said. “We took this important step to restore confidence in us in the marketplace, strengthen our liquidity and allow us to continue normal operations,” the Bear Stearns CEO said. The emergency funding will be available to Bear Stearns “as necessary” for an initial period of up to 28 days, JPMorgan said in a separate statement. JPMorgan Chase said the Fed, through its discount window, would provide its financing, adding it did not believe this transaction exposed its shareholders to “any material risk.” JPMorgan Chase said it was working closely with Bear Stearns on securing permanent financing or “other alternatives” for the Wall Street investment bank, which has been battered by a global credit crunch and the US housing slump. Bear Stearns has sustained hundreds of millions of dollars in losses in the mortgage-related credit crisis that erupted in mid
