Mark Lennihan, File, Associated Press
In this Oct. 27, 2009 file photo, James Dimon, chairman and CEO of JP Morgan Chase & Co., speaks in New York. JPMorgan Chase, the largest bank in the United States, on Thursday, May 10, 2012 said that it lost $2 billion in the past six weeks in a trading portfolio designed to hedge against risks the company takes with its own money.

There are now congressional and FBI investigations into how banking giant JP Morgan Chase managed to blow at least $2 billion on the type of risky trades that led to the near collapse of the financial system a few short years ago.

Depending on your point of view, the firm's transgression is either small change, or large evidence of something still rotten on Wall Street. The truth lies somewhere in the middle.

First, the $2 billion quarterly loss, which may end up being as much as $4 billion, is just pennies on the dollar in the context of the bank's $2.5 trillion in total assets. Even with the loss, the bank will post earnings of about $4 billion for the quarter, and its overall health is not in question, by anyone. Second, trading in derivative instruments as part of a bet on economic futures, while risky, is not clearly illegal.

On the other hand, and it is a big hand, appearances matter, and the financial damage to the institution and its industry pale in comparison to the reputational harm.

That is simply because there is still a deep-seeded skepticism among many Americans as to the fairness and stability of our securities markets. Mere mention of the term "credit-swap derivative" will trigger post-traumatic terror among people who saw their IRAs and 401ks plummet in value in the aftermath of the market's 2008 implosion.

It appeared then and it appears now financial markets are increasingly defined by highly complicated transactions executed at the speed of light. Transparency is gone and the old "buy and hold" rules of investing seem quaintly archaic. Consequently, so-called "mom-and-pop" investors have largely abandoned the market, and there is considerable doubt as to if and when they might return.

In this environment, any restoration of confidence for the individual investor will be retarded by headlines like those attending the aftermath of JP Morgan Chase's quarterly loss. It is therefore definitely not in the best interests of such institutions to imply by their behavior that it's business as usual and no lessons have been learned in the detritus of the market's 2008 swoon.

There are signs that such a realization might be gaining currency of its own.

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In a speech earlier this month to a gathering of hedge fund managers, the chief strategist of another large investment bank warned of a growing crisis of trust in financial institutions and the government institutions that oversee them.

The lack of trust has led to apathy bordering on animosity. The strategist told his audience how he once scoffed at the Occupy Wall Street protestors he would pass on his way to work. Now, he says, "They have a point. You know this."

The point is that public trust is itself a fragile commodity, one that institutions like JP Morgan Chase discount at their own risk.