This is the Cato Daily Podcast for Thursday, June 14, 2012. I'm Caleb Brown.

J.P. Morgan lost at least $3 billion in a quarter.

Stockholders took a big hit. The company was not in danger, and yet the company's head

is hauled before Congress. Why do we care? Because despite Dodd-Frank's financial regulation,

too big to fail and the bailouts that come with it are still a reality.

Mark Calabria, Director of Financial Regulation Studies at the Cato Institute, comments.

The concern with J.P. Morgan is, of course, that J.P. Morgan is viewed as too big to fail and that if J.P. Morgan had a big enough

loss that the taxpayer might be quote unquote forced to inject funds. And so some of the

concern is you know this trade itself does not look like it was going to threaten the solvency of J.P. Morgan are the financial system. But, you know, could some smaller firm make a same mistake? So could some other important firm make a mistake? Could this mistake have grown out of proportion to where it actually did threaten J.P. Morgan?

So a lot of the concern drives from the fact that much of the financial industry both explicitly and implicitly is being

backed by the taxpayer and so that's fundamentally the concern. There's also

the broader political concern that Dodd-Frank has not turned out to be the political winner

that many of its supporters had hoped.

There's a tremendous amount of, I think, public concern about it.

And so you are almost two years later after Dodd-Frank and so for those who promised

that Dodd-Frank would fix everything in the financial system this certainly

raises questions about how effective it is.

Jamie Diamond, a fierce critic of Dodd-Frank does that have something to do with him being brought before?

Absolutely, absolutely. Certainly a number of other firms have criticized Dodd-Frank, but

Jamie Diamond had the combination of one being probably one of the better managers in a firm that made it through the financial crisis in better shape than many others.

So this was a firm that came across as being very well run, but Jamie Diamond was also very vocal. I mean for instance he

publicly challenged Ben Bernanke about the implementation of Dodd-Frank and so when

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