The recent $2 billion debacle at JPMorgan Chase has drawn sharp focus on two major economic issues that we have failed to solve in the aftermath of the 2008 financial crisis: Our financial system is still dangerously biased toward speculative and Ponzi financing; “Too-Big-To-Fail” is an extremely flawed and dangerous model.

JPMorgan Chase insists that recently passed Dodd-Frank rules would not have applied in their current trading mess because the trade that lost $2 billion was a “hedge.” This trade was clearly not a “hedge” in any sense. A hedge secures a portion of an investment against a negative future event: Kellogg buying grain futures is a hedge against rising grain prices, for example. Hedges will not generate huge profits, nor will they generate huge losses.

Policy should bias the mix of units in the financial system against speculative finance. The Federal Reserve should be able to set an asset-equity minimum ratio for all banks. Dodd-Frank established regulated exchanges for trading derivatives and swaps, which are heavily used in speculative finance, but these exchanges must actually be implemented by regulators.

The second problem is the size of our banking and finance companies. Without a restriction on size, bank assets can pool together into ever larger arrangements and organizations. Our megabanks are obviously unmanageable. JPMorgan Chase lost $2 billion before the CEO knew what hit him. Bank of America has been tottering on the edge of meltdown for months, despite being run by some of the best educated individuals in the country. CitiGroup went through years of bailouts and government ownership. These organizations have extended beyond a manageable scope, and they make our financial system more unstable.