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"... on March 13, Bear Stearns advised the Federal Reserve and other government agencies that its liquidity position had significantly deteriorated and that it would have to file for bankruptcy the next day unless alternative sources of funds became available." The Fed chairman said that the central bank was forced to step in...

Treasury Agrees to Absorb any Losses to the Fed from Bear Stearns

Video from CNBC (hat tip idoc)

CNBC's Steve Liesman reports on a letter from Treasury Secretary Paulson to New York Fed President Tim Geithner (PDF). In the letter, Treasury agrees that the Fed can bill Treasury for any losses from the Bear Stearns deal.