Following JP Morgan's disclosure of a $2 billion loss, a small but increasingly vocal group of lawmakers and economists are arguing that a 60-year-old piece if financial legislation should never have been repealed in 1999.

They say the law, known as the Glass-Steagall Act, was so consequential that there's a direct link between its repeal and both the 2008 financial meltdown and JPMorgan's huge loss.

Congress passed the Glass-Steagall Act in 1933, in the midst of the Great Depression. The original intent was to prevent the kind of speculation and bank runs that led to the catastrophic stock market crash in 1929. But by 1999, the overwhelming consensus on Capitol Hill was that it was time for a change.

Then-President Bill Clinton and his treasury secretary, Larry Summers, urged Congress to ease the regulations that separated commercial and investment banks.

"If we don't pass this bill, we could find London or Frankfurt or, years down the road, Shanghai becoming the financial capital of the world," Sen. Chuck Schumer of New York said on the Senate floor.

Just eight senators voted against the repeal, including Democrat Byron Dorgan of Nebraska. The former senator tells weekends on All Things Considered host Guy Raz that at the time, he warned that repealing the law would fuel consolidation on Wall Street and raise the likelihood of taxpayer-funded bailouts.

"I was very concerned about what this was going to mean for the future of the country," he says.

Democrat Elizabeth Warren, who is running for U.S. Senate in Massachusetts, says she wants to bring Glass-Steagall back. She tells Raz that banks that offer commercial services — checking, savings and deposit accounts — should not be in the business of making financial bets that can result in massive losses — like at JPMorgan. That should be left to the Wall Street trading firms, she says.

"Glass-Steagall says there needs to be a wall between those two kinds of activities," Warren says. "It's not going to work to let the biggest financial institutions just go out and do what they want."

The Volcker Rule, part of the Dodd-Frank Act passed two years ago, is meant to keep those risky activities in check by having federal regulators watch the big banks. But Warren says that's not enough.

"If that's not working, if we don't have regulators who are able to be strong enough [and] write tough enough rules to keep that distinction in place, the Volcker Rule won't be able to do its job," she says.

What Happened To Dodd-Frank?

Back in 2010, when Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, the president hailed it as a turning point. The law was supposed to do things like prevent predatory lending, ban big banks from taking risky bets with taxpayer money and limit speculators from inflating prices of commodities.

Some of that is happening, but according to an article in the latest issue of Rolling Stone, Wall Street has been mounting a massive campaign to roll back key parts of the law. Reporter Matt Taibbi tells NPR that these challenges to the law – including to the Volcker Rule – could hold up Dodd-Frank from being fully implemented.

"The Volcker Rule took so long to write ... [it's] not going to go into effect until 2014," Taibbi says. "If it does, which I have serious doubts [about], I think there will be a lawsuit [or] legislation; something will happen and we'll just never get that rule."

The myriad of exceptions and challenges the financial industry inserted into Dodd-Frank caused the bill to balloon to thousands of pages, Taibbi says. If the proponents of Dodd-Frank had had their way, he says, the bill would have been a couple of very simple but hard rules.

One of those rules said "you can't be too big to fail," meaning banks would be broken up if they got too big, he says. Another rule would have had banks contribute to a fund that would pay for a bailout if needed. Neither of those rules made it into the bill in their original form.

"This is how Dodd-Frank worked in general," Taibbi says, "you started off with a very simple concept, and by the time industry was done with it, it was 1,000 pages long."

Under industry pressure last month, the Securities and Exchange Commission agreed to exempt thousands of Wall Street firms from oversight if they earn less than $8 billion a year. By one estimate, that could affect up to 85 percent of financial firms.

'That's What Banks Do'

The Dodd-Frank legislation has its share of critics who feel the law imposes layers of unnecessary bureaucracy on the financial system. Many of those same critics also say that bringing back Glass-Steagall is not the answer.

Peter Wallison, general counsel for the Treasury Department under President Reagan, tells NPR that proponents of regulation are just trying to take advantage of the JPMorgan trading loss to push for more regulation.

"I think this has been wildly exaggerated," Wallison says. "This is not something that taxpayers ought to be worried about."

The $2 billion loss would most certainly hurt shareholders, he says, but it doesn't do very much to damage the position of the bank or its health. The media, he says, incorrectly took the loss as an indication that banks are not being properly managed.

As far as the link between Glass-Steagall, the 2008 financial crisis and JPMorgan's loss, Wallison just doesn't see it.

"The banks made bad loans in 2008," he says. "They have always been permitted to make loans; Glass-Steagall had nothing to do with whether they make loans. That's what banks are supposed to be doing."

JPMorgan's risky trades, he says, were supposedly made in the interest of protecting the bank against losses. But any hedge, as they're called, is a potential loss itself. Wallison hopes this highly public loss won't stop other banks from hedging their assets, which he says could contribute to further losses.

"The only thing that it might do is to make sure that every complicated trade is gone over by many more people, and followed by more people than this one was," he says.