And just like that, the storied annals of Wall Street can now add "London Whale" to a growing list of infamous traders who have blown themselves up and left their employers with a hefty bill. In the case of JP Morgan (JPM) and its $2 billion blunder, the infraction appears well contained and not threatening. But no matter, for the third time in less than a year --following UBS (UBS) and Kweku in September, the collapse of MF Global in October-- we are once again talking about carelessness and loss of control in some of the nation's biggest, and most influential banks.

"How does this happen? Two billion dollars!" marvels Rich Ilczyszyn, co-founder of iiTrader.com, and former employee of MF Global. "This industry is supposed to be highly regulated. How does the CEO of the company not know what the hedge is doing in the company? We saw this with MF Global," he says in the attached video.

Of course there are many differences between JP Morgan's debacle and some of the other trader implosions, mainly that the biggest U.S. bank's solvency never came into question, and some of the alleged hedging positions were actually making money. Even so, it has not only gripped Wall Street, caught the attention of Main Street, and wounded the financial superstar CEO Jamie Dimon, but it will surely make the road to revision of the Dodd-Frank bill and Volcker rule more bumpy and probably less fruitful for the banking industry.

"It's a very small percentage of their book," Ilczyszyn says, before lamenting that the last thing the market needs right now is more risk, or a reactionary backlash from regulators.

"The Democrats are going to run with this all the way to the bank," he says, only half joking.

In the meantime, he says while JP Morgan has taken a $2 billion loss, plus seen about $12 billion in market value disappear, a scandal like this taints the entire industry.

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