With the recent publication of its final rule, the federal government's Financial Stability Oversight Council is now in position to designate certain nonbank firms as "systemically important financial institutions" (SIFIs). There is probably no aspect of the Dodd-Frank Act that will have more damaging effects on competition in the U.S. financial system.

Larry Lindsey, with his profound knowledge of Washington ways, has absolutely nailed the principal guiding motto of all regulatory bureaucracies: "Cross us and we will make you pay."

From the perspective of the corporate profit and loss statement, a trading loss is one expense item in the context of all revenues and expenses. So $2 billion should be compared to the bank's $26.7 billion in pretax profits for 2011, suggesting a reduction of something less than 10 percent in annual profit.

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facts are as thus far reported, what happened at JPMorgan is proof that the Volcker rule is unworkable and should be repealed.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 $2 billion loss by JPMorgan Chase has reawakened debate about whether banks are taking excessive risks, but many facts have gotten lost in the breathless media coverage.

It’s depressing to watch, but it is missing the point that the Volcker rule would not have prevented the loss and is probably unworkable.

The Shadow Financial Regulatory Committee works to identify and analyze developing trends and ongoing events that promise to affect the efficiency and safe operation of sectors of the financial services industry; explore the spectrum of short- and long-term implications of emerging problems and policy changes; help develop private, regulatory and legislative responses to such problems that promote efficiency and safety and further the public interest; and to assess and respond to proposed and actual public policy initiatives with respect to the impact on the public interest.

On the heel of the recent JP Morgan fiasco, American Enterprise Economist John Makin makes the case for how Dodd-Frank is an insufficient guarantor of financial stability.