JPMorgan now will bear the risk of the first $1 billion of losses if Bear Stearns' assets go bad. The Federal Reserve Bank of New York will cover the risk for the remaining $29 billion, instead of being on the hook for all of the first $30 billion in losses, as was originally announced March 16.

To do this, the New York Fed will take control of $30 billion of Bear Stearns' assets through a newly formed limited liability company managed by BlackRock Financial Management. The assets would serve as collateral for $29 billion in financing from the New York Fed at a 2.5% rate.

JPMorgan Chase will be responsible for the first $1 billion of losses in the portfolio, while the New York Fed would keep any gains.