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Jamie Dimon, the head of JPMorgan Chase, was proclaimed "America's least-hated banker" on the cover of The New York Times Magazine in December 2010. Today that title looks like a bad joke.

The reason is that Dimon's bank, America's largest, announced last week a loss of $2.3 billion on a complex derivatives trade. Dimon has been an outspoken critic of the Volcker Rule, a proposed new regulation that would forbid banks that are federally insured from making such trades that put at risk depositors' money. JPMorgan's loss guts Dimon's argument.

The bank claims that its trade was a hedge to protect it from possible losses on other investments. If that were the case, it might not come under the proposed rule. If, on the other hand, the loss were simply the result of a bad bet on some complex financial product, and was not a hedge, then it would come under the rule.

The larger point, however, is that banks that take retail deposits and could turn to the federal government for a bail-out during a panic should not be allowed to gamble in complex derivatives that only people with doctorates in mathematics from MIT can understand. (Come to think of it, they don't appear to understand some of them, either.) That's how TBTF (too big to fail) can occur. Then the Federal Reserve and the U.S. Treasury have to jump in to clean up the mess, and all Americans suffer.

Dimon has been the point man in Wall Street's attack on federal banking regulations enacted following the financial panic of 2008. He has claimed they are too limiting, and that such barriers will increase the cost of borrowing unnecessarily. He has been particularly vocal about the Volcker Rule.

Instead, he has said, the big banks should be required to keep larger capital reserves so that they are better able to weather a financial storm.

Dimon's credibility derived from the fact that his bank was better prepared for the last collapse than most. Because it had reduced its exposure to the worst subprime mortgage loans and had strengthened its reserves, it was one of the big banks that performed best during the crisis and the only one to remain profitable throughout. Now, however, that credibility is shot, and Dimon's argument about reliance on stronger reserves is about to be tested again.

Meanwhile, Wall Street's siren song rings hollow that the big banks learned their lesson from the last crisis and that new regulations are too limiting. What doesn't seem to be limited is the appetite of some of the nation's largest banks for risky financial products.

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