I am tired of hearing about Dimond, the London Whale, JPM, ad nauseum
The unfortunate derivatives trading of one person, costing JPM a cool $2b+, has given anyone who knows what a keyboard is carte blanche to proselytize, demonize, moralize, scold, lecture, and preach. Can we give it a rest, already?
First, the 'whale' in question was gambling with bank money, not depositor funds, so your checking accounts are not threatened (conversely, JPM's P/L statement for this quarter is). Second, I hasten to point out that prop trading was not one of the causes of the banking meltdown (but liquidity was). Third, the much ballyhooed Volcker amendment may or may not apply; even if it did, you could make a reasonable argument (depending on the details of the derivatives instruments) that he was just protecting the huge bond positions that bank has in bonds from various EU countries.
What should be done to prevent situations like this? Certainly not The Volcker Rule; it is nearly impossible to outlaw stupidity and/or risking-taking personalities. At the very least, let us admit that allowing JPM to purchase Bear Stearns, BAC to buy Merrill Lynch, and GS and MS to reclassify themselves as regular banks were you can deposit your paychecks are serious mistakes, creating an even larger danger than before the banking crisis.