Is JPMorgan Chase ( JPM) CEO Jamie Dimon the Manchurian Candidate for the federal regulators? Is he the guy who'll make it so shorting is risk-free? Is he the man who has put the nail in the coffin of the financial portion of this stock market, and maybe more than that?This huge loss at JPMorgan could not have come at a worse moment for the banking industry or for the stock market. The averages have declined pretty much in a straight line from April. The regulators are trying to finalize laws that will hurt banking profitability, and they've been given a bonanza by the best bank, which clearly had no idea what it was doing. The losses were global, too, meaning risks were taken in international-portfolio management in order to try taking advantage -- a directional bet that went totally awry, and something that the banks have privately said wasn't happening. Those denying such claims included JPMorgan, in its response to the "London whale" article in The Wall Street Journal -- yet these things clearly are happening. In short, Dimon just gave everyone a terrific reason for market players to sell everything, and he gave the regulators the ammunition they need to create a May panic in equities. Sell in May because of Jamie Dimon's error and go away. I think he wishes he could go away. The simple truth is that, with this loss, the bears have been totally vindicated, as have the toughest regulators. Meanwhile, those who have supported Jamie Dimon -- as I have done -- are naked and repudiated. It is true that the actual loss isn't that big. But it was flagged at the highest levels, it made the press, and Dimon still didn't take action and the regulators didn't, either. Everyone should have. Plus, these kinds of strategies are precisely what would make other banks fail, and what made MF Global fail: directional bets to make up for lost income because interest rates are so low. Incredible. One terrible trade and a terrible moment. Just awful. Of course, this is something the domestic banks don't do. No one will believe them for a couple of days, though, so they will get shot. If you recommend them now, you will be wrong instantly, because no one will trust anyone in this industry. That includes the regulators, who could have called Dimon when the Journal article appeared and asked, "What the heck is this and why do you have it? It doesn't fit the post-Lehman smell test." That assumes, of course, that there is a smell test and that they even bother to try smelling.