There is a very good reason the U.S. government regulates banks: Taxpayers guarantee their deposits, something we started doing after the Great Depression.

The downside is that when really big bankers make really big mistakes, taxpayers are left holding the bag.

Worse, when a large number of really big bankers run their businesses into the ground, as they did in 2008, they threaten the entire economy.

Everything about JPMorgan Chase is big, including its annual profit of $19 billion last year.  So when the bank suddenly lost $2 billion wheeling and dealing in exotic investments, it wasn’t a crisis for the firm.

It did raise a question: If JPMorgan has the smartest bankers on Wall Street and they lose billions, could the same thing happen to any of a handful of comparable banks with lesser talent and tighter profit margins?

Several books and documentaries have clearly explained the progression of the last big crisis. A group of very smart, young bankers created a way to bundle mortgages and sell them at a very handsome profit.

Enticed by those profits, other banks began jumping on the bandwagon. As the pool of traditional mortgages dried up, they began throwing sub-prime mortgages together.

Eventually, they were buying, bundling and selling worthless mortgages to people who had no chance of making their payments.

JPMorgan sat back in wonderment that other banks and investors were buying these bundles of worthless paper just because they were called “mortgages.” They were so amazed they began betting those bundles would fail.

When the economy began to tank, those mortgages were the first to go bad, which dragged down the economy, which led to job losses, which forced other people to default on their mortgages.

Down it spiraled as the mortgage boom went to complete bust, nearly crushing the U.S. economy. JPMorgan alone stood above the worst of the trouble.

Much of the pain remains: Workers jobless for years. Homeowners living in houses worth half what they owe. States cutting services to their poorest and most vulnerable citizens. A home construction industry nearly frozen in place for years on end. College graduates unable to find work. Spiraling federal deficits.

Things are beginning to thaw, just a little, and far too slowly for anyone’s satisfaction. But the big banks, like JPMorgan, are clearly back at the financial craps table.

Meanwhile, they are fighting a proposal to curb their boom-bust tendencies. The so-called Volcker Rule would sharply limit what they can bet on such highly speculative financial instruments.

The rule, named for former Federal Reserve Chairman Paul Volcker, is often compared to the Glass-Steagall Rule enacted after the Great Depression.

That law worked, but it was repealed in the mid-1990s.

History prior to Glass-Steagall shows that the U.S. experienced a banking panic about every six years. 

Unless rules are tightened, JPMorgan’s mistakes show we may be back on the old schedule.

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