Prodded by federal officials and racing the clock, J.P. Morgan Chase agreed Sunday to buy the battered and bleeding Bear Stearns for a nominal $2 a share in stock, a deal that values Wall Street's fifth-largest investment bank at a mere $236 million.

As part of the transaction, which the boards of both companies approved on Sunday, J.P. Morgan said it would guarantee the trading obligations of Bear Stearns and its subsidiaries "effective immediately."

Also as part of the deal, the Federal Reserve, eager to resolve the Bear Stearns crisis before jittery world stock markets opened on Monday, agreed to fund up to $30 billion of Bear Stearns' less-liquid assets, J.P. Morgan said.

The Fed also took the unusual step of reducing its discount rate on Sunday, between scheduled meetings of its policymaking Federal Open Market Committee; it lowered the rate, which is what it charges on loans to stressed banks, by one-quarter of a percentage point, to 3.25 percent.

The coordinated moves were designed to firm up banks' faith in one another as counterparties in the normal trading that underpins the credit markets. On TV interviews over the weekend, Treasury secretary Henry Paulson said that the government would "do what it takes" to protect the integrity of the financial system.

Jamie Dimon, J.P. Morgan Chase's chairman and chief executive, certainly played his role in trying to assure jittery markets.

"J.P. Morgan Chase stands behind Bear Stearns," Dimon said in a statement. "Bear Stearns' clients and counterparties should feel secure that J.P. Morgan is guaranteeing Bear Stearns' counterparty risk. We welcome their clients, counterparties, and employees to our firm, and we are glad to be their partner."

Dimon was equally eager to assuage any concern his shareholders had.

"This transaction will provide good long-term value for J.P. Morgan Chase shareholders," he said. "This acquisition meets our key criteria: We are taking reasonable risk, we have built in an appropriate margin for error, it strengthens our business, and we have a clear ability to execute."

Bear Stearns C.E.O. Alan Schwartz tried to put a good face on the forced sale, which brings a remarkably fast end to the 85-year-old firm he runs. "This transaction represents the best outcome for all of our constituencies based upon the current circumstances," he said.

Current circumstances are certainly grave, as reflected in Bear's plummeting value. It's shares, which had peaked at $170 in January 2007, fell steadily as its heavy bets on mortgage-backed securities turned south.

The pace of decline accelerated on Friday, when Bear was forced to accept an emergency cash bailout from the Fed through J.P. Morgan. Bear shares fell 47 percent on that news, closing at $30.

After markets closed Friday, credit-ratings firms Moody's and Standard & Poor's both downgraded Bear Stearns, which would have severely limited the bank's viability as a trading partner. That could have accelerated its collapse, which would have threatened to drag down other banks to which Bear owed money.

The Wall Street Journal website reported Sunday that Lehman Brothers chief executive Richard Fuld, cut short a trip to India and returned home after talking by phone with Lehman executives and Treasury secretary Paulson.

Also on Portfolio.com:

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• Market Movers: Is Bear Stearns Really Worth $2?
• Market Movers: The Fed Needs Credit Confidence to Return. Today.
• Wall Street Banks Tumble
• Wall Street: It's a Mad, Mad, Mad, Mad World