"They've now just provided some ammunition, one would suspect, to the legislative and regulatory personnel who will just point at this and say, 'It seems to me that these people don't really have a good handle on what they're doing,'" Satyajit Das, author of "Extreme Money: Masters of the Universe and the Cult of Risk," said in a phone interview from Sydney.

Self-Inflicted Losses

JPMorgan Chief Executive Officer Jamie Dimon said that while the losses were "self-inflicted," they may not have run afoul of the Volcker rule and don't weaken arguments against the proposal.

"This does not change analyses, facts, detailed argument," Dimon said yesterday on a conference call with analysts. "It is very unfortunate. It plays right into all the hands of a bunch of pundits out there."

Volcker, who testified at a Senate Banking Committee hearing on May 9, told reporters there was "no question" that lobbying from banks contributed to the complexity of the initial proposal.

"I could give you stories all day about lobbyists making things more complicated," the former Fed chairman said.

The Volcker rule allows banks to continue activities that are considered hedging, as well as to serve as market-makers, accepting risk or holding shares of trades to facilitate client orders.

Hedging Exemption

Dimon said on the conference call that the original premise of the trades by the chief investment office was for the firm's hedging. Synthetic credit products are derivatives that generate gains and losses tied to credit performance without the owner buying or selling actual debt.

Levin and Merkley, in their February comment letter, pushed regulators to tighten the exemption for hedging, calling some of what may be allowed a "major weakness" in the rule.