If these rules had been issued two years ago, they might have been more friendly to the banks, which still had some significant support from regulators, notably in the Office of the Comptroller of the Currency. Then came the “London Whale” fiasco at JPMorgan Chase, in which traders lost $6 billion trading complex derivatives. When that first came out, the man in charge of regulating JPMorgan for the comptroller told Senate staff members that he agreed with the bank that the trades came within the hedging exemption. The new rule makes clear that is not the case.

Under the comptroller’s policies, big banks have groups of inspectors who spend all their time at the bank’s offices. That is supposed to assure they know their banks intimately, but it may also mean they are in no position to know that their bank is doing things other banks do not do. Nor does it foster the appearance of independence. The comptroller is now considering whether to end that system.

It is hardly unprecedented for banks to lose a lot of money on trading errors, points out Robert B. Ahdieh, a professor and vice dean at Emory University Law School who studies regulatory law. But while “they may not be more frequent now, they are more salient.” In the aftermath of bailouts, the fear that new ones might be necessary is always there.

In fighting the Volcker Rule, banks warned that customers might suffer if the banks had to curtail their market-making activities and added that proprietary trading had not caused the financial crisis anyway. Such arguments may be correct, but they miss the actual thrust of what is going on in bank regulation now.

Having learned that big banks can be hazardous to a nation’s wealth, regulators would be quite happy if their big banks were smaller, or less diversified. If the end result of the Volcker Rule were that big banks became less competitive in areas peripheral to commercial banking, that might be a good thing.

Banks are special because they provide loans and operate payment systems. They are blessed with deposit insurance, assuring access to money at lower rates than others would have to pay. Regulators used to assume, if they thought about it at all, that other activities were fine because they would provide profits that could support essential functions. Now they fear potential losses.

The Volcker Rule as adopted virtually exempts small banks from most of its rules. That may reflect political reality; smaller banks have a lot of lobbying power because they are in every congressional district. But it also reflects the fact that failures of small banks do not threaten the system.