A businessman runs past Bear Stearns in New York on Friday. The Federal Reserve invoked a rarely used Depression-era procedure Friday to bolster troubled Bear Stearns Cos. and said it will provide even more help to combat a serious credit crisis. JPMorgan Chase is providing an undisclosed amount of secured funding to Bear for 28 days, backstopped by the Federal Reserve Bank of New York.

New York ? On the verge of a collapse that could have shaken the very foundations of the U.S. financial system, investment bank Bear Stearns Cos. was bailed out Friday by a rival and the federal government. The near-miss raised new alarm about the credit crisis – and whether other big firms might be in jeopardy.

The rescue came from JPMorgan Chase & Co. and, in an extraordinary step, the Federal Reserve, both rushing to pump new money into the venerable Wall Street firm after its financial state deteriorated so much in a 24-hour period that it threatened to fail.

Bear Stearns stock lost nearly half its market value, about $5.7 billion, in a matter of minutes, and pulled the broader market down with it. The Dow Jones industrial average fell nearly 200 points.

If Bear Stearns were to go under, “it has the potential of bringing down the whole market,” said Richard Bove, an analyst at Punk, Ziegel & Co. “This is the crescendo of the crisis.”

JPMorgan and the central bank agreed to extend loans for 28 days to Bear Stearns, the nation’s fifth-largest investment bank and the one hit hardest by the subprime mortgage mess.

Two hedge funds managed by Bear Stearns failed last summer, setting off a credit crisis that has swept up banks and brokerages around the globe.

In backing up JPMorgan, the Fed dusted off a rarely used, Depression-era provision to provide loans. It also said it was ready to step in to fight an erosion of confidence in the nation’s largest financial institutions.

Officials from the Fed and the Securities and Exchange Commission held conference calls throughout the day Thursday to assess the potential impact on the broader economy, according to a Treasury official, who spoke on condition of anonymity.

For Bear, the crisis started when market speculation grew that it might have to seize collateral – mostly mortgage-backed securities worth next to nothing – from the private equity firm Carlyle Group.

Carlyle runs a bond fund and has come under intense pressure during the past week from creditors demanding collateral to back their investments.

As speculation swelled in the market, investors, customers and lenders raced to withdraw their money or rescind their credit lines. By Thursday night, Bear Stearns Chief Executive Alan Schwartz said, the bank realized the withdrawals might outpace the bank’s resources – so it reached out to JPMorgan for help.

JPMorgan, the nation’s third-largest bank, has been hurt far less by the mortgage mess than other financial institutions. It will provide secured loans to Bear for four weeks – insured, in essence, by the Fed.

Schwartz said it would buy Bear time and allow it to convince customers “that we have the ability to fund ourselves every day, to do business as usual.” No one has disclosed how large the financing offered to Bear Stearns is.

The CEO also confirmed – as many on Wall Street had suspected – that Bear Stearns could be up for sale. He told analysts on a conference call that the bailout is a “bridge to a more permanent solution.”

Bear is working with investment bank Lazard Ltd. to explore its options. That may include an outright sale of Bear Stearns to JPMorgan, something top executives from both banks were said to be discussing.