Please explain clearly and specifically.

Right before the start of the financial crisis, the Federal Reserve Bank of New York helped negotiate a takeover of Bear Stearns by JPMorgan Chase (both investment banks at the time). The assets of Bear Stearns were sold and the Federal Reserve extended a $30 billion line of credit to help JPMorgan Chase absorb the potential losses. The regulators justified the intervention with the following argument: the threat of a potential collapse of the extensive credit derivative instruments issued by Bear Stearns has led to a sudden withdrawal of funds by investors, creating essentially a run on the investment bank, and they believed the collapse would lead to a system-wide problem (a domino effect). In the New York Times, Sebastian Mallaby wrote the following about the intervention: The incentive for private lenders and buyers of derivatives to monitor banks risk has to some extent been blunted. Use our concepts of asymmetric information and too big to fail to explain the Mallaby quote and describe the potential problems created by the intervention for the Federal Reserve.