Dimon, 56, has been a prominent critic of the Dodd-Frank provisions including the so-called Volcker rule, which is meant to bar proprietary trading by banks with federally insured deposits. In a conference call to discuss the losses stemming from “egregious” failures in the bank's chief investment office, Dimon accurately forecast the Washington response.

“It is very unfortunate,” Dimon said. “It plays right into all the hands of a bunch of pundits out there.”

Senator Tim Johnson, the South Dakota Democrat who leads the Senate Banking Committee, said in a statement that the loss underlines why “opponents of Wall Street reform must not be allowed to gut important protections for the financial system and taxpayers.” Senator Bob Corker, a Tennessee Republican who serves on the committee, called today for hearings on the loss.

Senator Carl Levin, the Michigan Democrat who co-wrote the trading ban named for former Federal Reserve Chairman Paul Volcker, said today in a conference call with reporters that the loss shows Dimon's view to be “dramatically proven wrong.”

“It's a very telling moment and I guess we should thank JPMorgan for exposing an area where we clearly need more oversight,” Jared Bernstein, former chief economist for Vice President Joe Biden, said today.

Andrea Saul, a spokeswoman for Republican presidential contender Mitt Romney said today that the loss “demonstrates the importance of oversight and transparency in the derivatives market, something Governor Romney has called for in the past.”

'More Clarity'

“As president, Governor Romney will push for common-sense regulation that gives regulators tools to do their jobs, and that gives investors more clarity,” Saul said in a statement.

Romney, a former private-equity executive who served as Massachusetts governor, declined to answer questions about the events at JPMorgan today during a campaign rally in Charlotte, North Carolina.

Levin and Senator Jeff Merkley, the Oregon Democrat who co- wrote the proprietary-trading provision, said in a conference call that JPMorgan has become a “textbook illustration” of why regulators should tighten the restrictions being drafted in the Volcker rule.

“Four years after the downfall of Bear Stearns, Lehman Brothers and the hundreds of billions in a bank bailout, we still see that there is a nagging need for regulators to implement financial reforms which became law in 2010,” Bart Chilton, a Democrat on the Commodity Futures Trading Commission, said today.

Wall Street firms including JPMorgan, Goldman Sachs Group Inc. and Morgan Stanley, have lobbied regulators including the Fed, Securities and Exchange Commission and Federal Deposit Insurance Corp. to expand exemptions included in their initial Volcker rule proposal, complaining that the measure is so broad and ill-defined that it will increase risks for clients.

The rule would allow banks to continue activities that are considered hedging, as well as to serve as market-makers, accepting risk or holding shares of trades to facilitate client orders. Levin and Merkley said JPMorgan's loss shows the need for a stricter interpretation of the hedging exemption included in the draft proposal released in October.

Dimon has said the trade wouldn't have run afoul of the Volcker rule restrictions, which are scheduled to take effect on July 21.

Frank said he planned to use the bank's loss to defend the law against efforts to roll back derivatives regulations and force wider exemptions in the Volcker rule. He pointed to the impact of the losses on Dimon, who has been the leading voice against many of the regulations Frank put into place.

“This will diminish his ability to be that voice,” Frank said.

Bloomberg News

Copyright 2018 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.