The $2 billion loss at JPMorgan Chase (JPM) has reopened debate on the Volcker rule. The proponents of the rule have seized on the story as proof that the Volcker rule is necessary and should be quickly put into effect by regulation. In reality, however, if the facts are as thus far reported, what happened at JPMorgan is proof that the Volcker rule is unworkable and should be repealed. 

The banking industry suffered credit crises in the 1970s, 1980s, 1990s, and 2000s. An unavoidable conclusion is that its loan loss reserves were in all cases too small. 

We simply have to face the fact that banking is fundamentally risky. As I decided long ago when working in banks, the reason we needed to wear dark suits and have classic buildings was to look conservative in order to offset the real riskiness of what we were doing. 

Here we go again.  A series of uncoordinated government policies are once more setting up the U.S. banking system for major losses and possibly another financial crisis.  

The Dodd-Frank Act in general, and in particular its favorite child, the Consumer Financial Protection Bureau, represent sharp political disputes, as now with bypassing the Senate by the "recess" appointment of its director. But more fundamentally, they represent clashing political philosophies.

Housing markets will continue to go sideways, on average, during 2012, then they will begin their cyclical recovery in 2013.

If financial stability was at the top of the central banks' agenda by 1999, one can reasonably wonder what they were doing about it from 1999 to 2007.

If we hope to have a viable banking industry in the future, the Volcker Rule - among many other provisions of the Dodd-Frank should be revisited now.