Bear Stearns has devised a plan to bail out one of its troubled hedge funds as it attempts to provide a sober assessment of the impact on the market.

Its plan will add up to $3.2bn (€2.4bn) to its Bear Stearns High Grade Structured Credit Enhanced Leveraged Fund. In a statement released today, the bank explained that in recent weeks it had been trying to improve the liquidity and reduce the leverage of the funds.