I love nostalgia, but in my desire to go back in time, 2008 isn't one of the top settings on my wayback machine. Yet the unfolding of the JPMorgan Chase's $2 billion mishap put me right back into those fun days of the implosion of Lehman Brothers–and the resultant Great Recession.

It's a story that's still developing, but the gist is that some bad investment decisions involving derivatives gone wild could cost JPMorgan—one of the “good guys” of the '08 meltdown—as much as $5 billion, depending on who you talk to.

Michael Hiltzik of the Los Angeles Times breaks it down:

JPMorgan's trader, a London-based derivatives expert whose portfolio was so outsized he became known in the markets as the London Whale, essentially bet that corporate debt was becoming less risky as corporations were getting stronger—in trading parlance, he was long corporate debt. But he did so in a way that even a tiny hiccup in the index he was trading could be exploited by rival traders. And that's what happened.

Of course, heads rolled over the situation—with the exception of the noggin of JPM Chair and CEO Jamie Dimon, who stockholders just rewarded with a vote of confidence and a $23 million pay package. Not bad for a guy who just cost the company $2 billion (since the trade is still playing out, some say the loss could be closer to $5 billion) and publicly stated of the bank's little math mixup: “We know we were sloppy. We know we were stupid. We know there was bad judgment.”

(On the other side of the coin, another bank, Wells Fargo, recently fired a lowly customer service rep for shoplifting – more than 30 years ago. Guess she wasn't stupid or sloppy enough to warrant keeping her job.)

Some pundits say there's little to fear from the single incident. A $5 billion loss is chump change to a bank the size of JPM, which reported profits of $19 billion in 2011 and isn't a candidate for any sort of bailout. But others are concerned that the current loose language of the Dodd-Frank Act—designed to prevent future financial meltdowns—could permit other banks to play fast and loose with other people's money through portfolio hedging.

The fallout from the JPM “oopsie” remains to be seen. So far, the SEC has launched an investigation, and shareholders have filed the first lawsuits, accusing the bank and its management of excessive risk.

What's truly mind-boggling is that even with more regulation, something like this could happen—a scant 4 years after the events that culminated in a financial disaster we still haven't recovered from.

When the 2008 meltdown hit, many insurance people were rightfully indignant about being painted with the same brush as the banks and investment firms behind the crash. That issue is still alive and well today, with insurance companies that own and operate savings & loans under the microscope (see “Insurers Face New Federal Regulation from Federal Reserve”).

The core of the issue lies with the Volcker Rule, which prohibits financial firms under FDIC protection from proprietary trading for their own account. And although the SEC is considering an exemption for insurers, the issue is far from settled.

Back during that other Depression, Congress passed the Glass-Steagall Act, which erected the firewall between banks and insurance. The wall came down in 1999 with Gramm-Leach-Bliley, giving banking and insurance free rein to intermingle.

Once upon a time, both banking and insurance were synonymous with security, stability and strength. For banks, that image has been tarnished by risky schemes like that perpetrated by JPM.

The Armageddon that some in the insurance industry feared from bank/insurance blending may not have come to pass, but even deregulation's biggest supporters have to admit that the resulting growth of complex financial derivatives has been a thorn in the side of the conservative-by-nature insurance industry.

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Toops Scoops: JPMorgan's &quot;Sloppy&quot; Move Brings Back Bad Memories

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Toops Scoops: JPMorgan's "Sloppy" Move Brings Back Bad Memories