Continued from page 1

Regulators are on alert as a result of the incident. Investigations have been launched by the Fed, the Securities and Exchange Commission and the Justice Department to determine what happened and whether any wrongdoing was involved.

President Obama also used his weekly address to say the J.P. Morgan loss wouldn’t have occurred if all the rules governing risky trading, enacted in 2010, were in place today.

But Mr. Dimon insists that the bank’s activities were within legal bounds, though he admitted to shareholders that the bank made “egregious” errors and misguided investments.

“This is an important event,” former chief White House economic adviser Lawrence H. Summers told Reuters television. “It reminds us that even very well managed institutions with very sophisticated systems can make very large mistakes.”

Mr. Summers, who was instrumental first in deregulating banks during the 1990s and then in passing the regulatory-reform bill in 2010, said regulators will not be able to prevent such spectacular mistakes in the future, so they must try somehow to make the system resilient enough to withstand them.

“Significant errors will be made at almost all institutions at one time or another,” he said. “In light of what has happened, one would tend to have a bias towards larger safety buffers, larger capital requirements, and larger levels of liquidity” at the biggest banks.

While regulators are planning more such restrictions on the big banks, others openly advocate downsizing them as the best way of ensuring they can’t drag down the economy if they fail again. Besides Mr. Hoenig, officials at the Fed’s Dallas reserve bank also are arguing in favor of breaking up the big banks or at least reducing their size, Mr. Gardner said.

Some bank analysts say regulators and the press are overreacting to the incident.

“What’s the fuss?” asked Richard Christopher Whalen, who noted that J.P. Morgan’s trading loss was dwarfed by the bank’s $25 billion in annual profits and even larger revenues and assets.

“What J.P. Morgan was doing is precisely how the bank makes more than half of its annual profit,” he said. “The creation, trading and arbitrage of risk exposures is a big business for JPM and one that the bank has done well.”

The fact is, the federal government needs banks as big as J.P. Morgan to buy and resell the U.S. Treasury’s enormous debts — the result of budget deficits of more than $1 trillion in recent years — and help the Fed manage its gigantic balance sheet with assets totaling more than $5 trillion, Mr. Whalen said.

“The vast expansion of the U.S. money supply over the past three decades makes such financial alchemy necessary,” he said. “The Fed keeps these zombies alive in order to preserve the Treasury’s ability to issue debt. In that sense, nothing has changed in Washington since Abraham Lincoln created national banks to finance the Civil War.”