Another day, another $1.7 billion in fines for JP Morgan. This time, it's for failing to catch Ponzi schemer Bernie Madoff as it managed his ill gotten gains. Now the bank has to admit that it didn't have the systems in place to catch Madoff and implement them under a deferred criminal prosecution agreement.

You could call this a case of "too big to manage," one of anti-Wall Street crusader Senator Elizabeth Warren's (D-MA) favorite catchphrases.

Back in November, she used it to talk about reinstating Glass-Steagall, the regulation that once split commercial and investment banks.

"The new Glass-Steagall Act would attack both 'too big' and 'to fail,'" Warren said..."It would reduce failures of the big banks by making banking boring, protecting deposits, and providing stability to the system even in bad times. And it would reduce 'too big' by dismantling the behemoths, so that big banks would still be big—but not too big to fail or, for that matter, too big to manage, too big to regulate, too big for trial, or too big for jail."

In terms of management, the Madoff case is a catastrophe arguably worse than the London Whale.

Sure, the London Whale ended up costing JP Morgan $6 billion, and it was born in the bank's own Chief Investment Office, but that failing trade was only hidden from JPM's execs for about half a year. Madoff managed to fool everyone for decades.

Well, almost everyone. There were people at JP Morgan who sounded the alarm, according to Iriving Picard, the trustee appointed by New York's bankruptcy trustee to review Madoff's case for his "clients".

Picard's 2011 report indicates that two JPM executives knew something was wrong with Madoff, Risk Chairman John Hogan and COO Matt Zames.

Here's a quote from Hogan back in 2007 (From Picard's report, via CNN Money):

"For whatever it['s] worth, I am sitting at lunch with Matt Zames who just told me that there is a well-known cloud over the head of Madoff and that his returns are speculated to be part of a [P]onzi scheme."

So how did something like this get lost? Banks are supposed to file 'Suspicious Activity Reports' for this kind of thing. Those go to the Department of Justice.

The DOJ, for its part, gets 1.6 billion of these SAR reports a year, and JP Morgan files up to 250,000 of them itself.

Still, two high level executives had their suspicions about Madoff a year and a half before he was arrested. They won't penalized for it though. That's part of the deal with the DOJ, according to the Wall Street Journal.

Take that as you like it.