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Shares of JPMorgan Chase (JPM) tumbled Friday morning after the firm shocked investors Thursday evening by disclosing a $2 billion trading loss.

The revelations provide more evidence "the banks cannot manage their risk," says MIT Sloan School professor and former IMF chief economist Simon Johnson. "We need to get our [banks] out of this crazy business before they do more profound damage to all of us."

As with many others, Johnson says JPMorgan's big loss prove the need for more stringent regulation of banks' trading activities. "Anyone who opposes the Volcker Rule now should be exposed to repeated and complete public ridicule," he says.

(On Thursday's conference call, JPMorgan CEO Jamie Dimon said the hedging that led to the loss would not have violated the Volcker Rule, but that has only emboldened proponents of tougher restrictions on banks. "The enormous loss JPMorgan announced today is just the latest evidence that what banks call 'hedges' are often risky bets that so-called 'too big to fail' banks have no business making," said Sen. Carl Levin (D-MI).)

Beyond the need to strengthen the Volcker Rule, Johnson says JP Morgan's big loss means "the Fed's approach to bank capital and stress test has completely failed."

Such views will not surprise anyone familiar with Johnson's blog Baseline Scenario or his book 13 Bankers.

More surprisingly, Johnson says the buck stops with Jamie Dimon and argues the famed CEO should lose his job over this loss, which many observers believe will ultimately cost the bank far more than $2 billion.

"At any other company in any other industry under these circumstances the CEO would resign," Johnson says. "If Boeing or Caterpillar or any other reputable company were to lose this much money relative to operations in a haphazard manner on activities that were so contrary to the principles in which the CEO stood? Yes the person in question would resign. If he didn't resign, the board would remove him."

Barring that, Johnson said regulators should remove the responsible executives. "But that's not going to happen in banking; that's the power and privilege that goes with being 'too big to fail,'" he says.

Again, Johnson's views do not represent the consensus, which is that JPMorgan will move on from this, albeit with a hit to earnings and a blemish on Dimon's once-sterling reputation.

Still, several sell-side analysts seem to agree with his view that "risk management totally broke down at JPM Chase."