The recent disclosure that JP Morgan has lost $2 billion in a “hedging” strategy gone wrong has rekindled some debate over the Volcker rule, which was part of the Dodd-Frank Act. JP Morgan Chairman and CEO Jamie Dimon has been a critic of the Volcker rule, which would return some restrictions on proprietary trading by commercial banks that were lifted when the Glass-Steagall Act was rescinded in 1999.

In doing research on  the Volcker rule, I found a  bit of news that I missed when it came out a few weeks back. Apparently the Federal Reserve, on April 19,  extended the deadline for banks to comply with the Volcker rule from July 21, 2012 to July 21, 2014. Yes two whole years.

While a quick Google search found a smattering of stories regarding this news, it certainly wasn’t front-page material. I guess the Fed is the front line regulator of banks and it is their job to execute regulations passed by Congress. And while there may be some reason for such a delay—many of these complex trades are priced far out in the future—it seems pretty odd that what is in essence a private organization (the Federal Reserve) can trump the intent of Congress— like it or not our elected representatives — by pushing off the effective date of a regulation by two years. The Volcker rule was borne of a crisis so large it nearly sent our country into another Great Depression. It had already been argued over and whittled down by months of lobbying by powerful forces. And of course the essence of the Volcker rule is to reinstate some parts of Glass Steagall, which was passed in 1933 in reaction to reckless speculation by deposit institutions leading to the “Great Depression. “

Dimon also serves on the board of the New York Fed,  one of JP Morgan’s regulators. He referred to the loss as an “egregious’” failure in its chief investment office.

It isn’t clear whether the Volcker rule would have prohibited the trades as they were deemed hedges though unless they were hedging the risk of specific loans made by JP Morgan, it seems the underlying positions the “poorly constructed” hedges were attempting to offset would be.

There has been a firestorm of reporting and calls for investigations in what, given the size of JP Morgan, is not that huge of a loss. But if proprietary trading by banks is a major cause of the crisis we are still trying to escape from, we all need to pay more attention when a regulator—one whose member banks include top bank executives on its board — decides to delay implementation of laws passed by Congress for two years.

The Fed action should have been much bigger news that the bad JP Morgan trade. Perhaps the firestorm resulting from it will get people to pay attention.