Roosevelt Institute Senior Fellow Jeff Madrick joined host of Bloomberg Law Lee Pacchia and Chris Whalen of Tangent Capital Partner to discuss JP Morgan's massive trading loss and how to prevent too big to fail banks from making mistakes that threaten the whole economy. Something's got to give, because as it stands, taxpayers are "underwriting these profits so that these individual bankers can make a fortune," Jeff says.

It may not even be an issue of too big to fail, however. As Jeff puts it, "Too interconnected to allow to fail is really the issue here." So what to do about this kind of speculative activity with FDIC-insured deposit money? Despite the enormity of the system, Jeff has some solid solutions. "Higher capital requirements would make a difference, separating this kind of activity from more plain vanilla banking would make a difference," he says. "If we made these derivatives transparent, if they were in a clearinghouse and somebody knew the prices…that would help enormously." We need a "different kind of Glass Steagall," he says, one that is modernized to fit our times.