Eric Schneiderman (Photo: MSNBC)

Today's sudden revelation that J.P. Morgan lost $2 billion†had a lot of mouths hanging open, and while the detail's of the company's wagers gone wrong aren't all present, Attorney General Eric Schneiderman argued on MSNBC that the case demonstrates the need of strengthening financial regulations.

"People talk about principles," Mr. Schneiderman said. "There's one principle: Unregulated markets always crash. Unregulated markets always produce massive losses on risky bets."

Mr. Schneiderman then emphasized the importance of having clear regulatory rules so there's no ambiguity about what is needed to avoid massive loses.

"This is the kind of thing that can happen, so we do need rules in place so we can make sure everyone understands what the rules are," he said. "I personally don't think you should be able to hedge a position you don't have. If you just want to go place a bet, we have places for that, they're called casinos. That's not something we should be doing in markets open to the public."

While we need additional rules regulating the system, Mr. Schneiderman further contended, they should be simple enough that a layperson can operate within the market.

"We need a simple set of rules that everyone understands. You can't all play by the same set of rules if no one knows what they are," he said. "The public -- demonstrated by data released in the last couple weeks -- still has not come back into the market to the level of confidence we want. They're not reinvesting because they just have a sense that it's not just a casino, it's a rigged casino."

Watch below:
http://www.msnbc.msn.com/id/32545640