Bear Stearns may have met one of the few reasons for the government to subsidize a failing private institution;  Mass hysteria.   I agree with what BusinessWeek concludes:

“It would have been highly risky for other Wall Street firms if Bear Stearns had been allowed to go under because Bear is tightly interconnected with them as both a borrower and a lender. Any firms that are owed a lot of money by Bear would have fallen under suspicion, on grounds that they might not be able to pay their own debts if Bear failed to pay them. That could have triggered a dangerous wave of defaults. The rescue by JPMorgan Chase gives the financial system breathing room to pay off Bear’s debts gradually. “

Read the whole article here.