What Is Systemic Risk? Does It Apply to Recent JP Morgan Losses?

"JP Morgan recently disclosed that it suffered significant losses in a unit that traded complex
financial instruments. Congress will be examining the JP Morgan trades and oversight by JP
Morgan’s regulators. Two of the questions that policymakers might ask are could the JP Morgan
losses or similar trades trigger another financial crisis and how would the Volcker Rule in the
Dodd-Frank Act have applied to the JP Morgan trades? This report explains general systemic risk
analysis. It evaluates recent JP Morgan trades in light of our understanding of sources of systemic
risk. If the sizes of the losses remain small, it appears extremely unlikely that JP Morgan’s
reported losses in its asset liabilities management unit could trigger a financial crisis or systemic
event..."