Splat! Moby Dick Lays an Egg

No modesty for those who occupy Wall Street seats of power as JP Morgan’s “London Whale” harpoons himself with a $2 billion loss, while his bosses (and the SEC) try to figure out when a hedge becomes a bet.

We are back in the land of “They Must Know What They’re Doing or They Wouldn’t Be Where They Are,” annals of the clueless steering the mammoth (the captain of the “Titanic,” LBJ running the Vietnam war, W in Iraq) with Morgan CEO admitting the firm was “stupid” over “huge moves in the marketplace” that made its “positions more complex...and badly monitored.”

Well said, but only a month ago, Jamie Dimon was complaining about the Volcker rule, which limits banks' ability to make risky trades, and with rules that govern derivatives in the new Dodd-Frank regulations, which have not gone into effect yet.

“The enormous loss JPMorgan announced today is just the latest evidence that what banks call ‘hedges’ are often risky bets that so-called ‘too big to fail’ banks have no business making,” says Democratic Sen. Carl Levin, who co-wrote the language in the bill. “Today’s announcement is a stark reminder of the need for regulators to establish tough, effective standards.”

The Wall Street banks are still making deals so complex that they themselves don’t understand them, to say nothing of the rest of us, but still resist any fencing in of their gambles.

Meanwhile, JP Morgan’s Whale turns out to be no Moby Dick, just a clueless tub of sea lard floundering in the financial waves.