Bear Stearns said Friday that it had obtained short-term financing from the Federal Reserve Bank of New York and JPMorgan Chase & Co. after the firm's liquidity "significantly deteriorated" on Thursday. Market rumors that Wall Street's mortgage giant was facing problems came to a head earlier in the week, although at the time the firm denied it was facing any liquidity problems. JPMorgan Chase provided Bear Stearns with a 28-day secured loan facility, Bear Stearns said in a press statement, which will allow the Wall Street firm to "access liquidity as needed." Bear Stearns also said it is exploring more permenant financing as well as "other alternatives" with JPMorgan. Bear CEO Alan Schwartz said that market rumors of a cash crunch had become a self-fulfilling prophecy. "Bear Stearns has been the subject of a multitude of market rumors regarding our liquidity," he said. "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." In a press statement, JPMorgan said that it "does not believe this transaction exposes its shareholders to any material risk." Shares in Bear Stearns fell nearly 50 percent on the news, dropping to $30.12 on the New York Stock Exchange, while JP Morgan saw its shares fall only slightly. Disclosure: The author owned no positions in BSC when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.