Banks were gambling with deposits and lost big. Legislation came about to prevent banks from doing it again, but then Clinton repealed it on his way out the door. That laid the groundwork for fraud and loss.
Hedging is just another term for proprietary gambling, which was outlawed to prevent what JPM did (along with many more likely to come out in the coming weeks as other institutions are forced to reveal their logs).
What's worse is that JPM's Jamie Diamond is on the Federal Reserve board. When the $16 trillion dollars were dolled out, JPM was tasked with distributing the funds. Legalized counterfeiting. JPM's $2 billion loss is chump change compared to what they have been doing for years.
The government won't be taking them to the woodshed, they are simply setting up a closer relationship between the banks and the state. More regulation of the industry is not the end goal, but more control of the state by the banks.
On another front: Silver and gold prices are diving, I believe artificially and temporarily, to drive investors to government bonds and the dollar, which are more unstable today than ever. I expect to see real commodities and valuable metals rise again as the dollar continues its down slide.
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