J.P. Morgan Chase, which became the nation's biggest bank by avoiding the fatal and near-fatal losses suffered by its peers in 2008, stunned the financial world Thursday by announcing that it had lost more than $2 billion in complex derivative trading.

Jamie Dimon, the bank's outspoken CEO, attributed the loss to "errors, sloppiness and bad judgment" even while arguing against tougher regulations designed to prevent "too-big-to-fail" banks from engaging in conduct that jeopardizes the broader economy.

At issue is the "Volcker" rule, named for former Federal Reserve Chairman Paul Volcker. Authorized by the Dodd-Frank reform law, in response to the financial crisis, the Volcker rule had not yet been completed and is not scheduled for implementation until July 2014.

It would go to the heart of the J.P. Morgan Chase losses. Mr. Dimon claimed that the loss resulted from trading in derivatives ­- financial instruments based on market fluctuations of securities and other assets - as a means to hedge against potential losses in other investments.

Some financial experts doubted that the trading was a hedge, however. Rather, they saw it as aggressive "proprietary" trading of the bank's assets, noting that the London trader who handled it had placed investment bets so large that they caused price fluctuations in several markets. That trader was so active, with such large sums, that he was known in the markets as "the Whale" or "Voldemort," the "Harry Potter" villain.

The Volcker rule would draw a bright line between legitimate hedging and reckless investing by big investment banks - sometimes against the interests of their clients and stockholders - that helped drive the financial crisis.

The rule should be implemented on schedule.