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How can a bank lose $2 billion in six weeks?

That’s just one of the mysteries surrounding the news that JPMorgan Chase, widely thought one of the safest U.S. banks, is gushing red ink from bad trading bets. As details slowly emerged Friday, the shares of the nation’s largest bank fell hard, as did those of several rivals.

The story behind the loss is complex, and rich in irony. How it’s viewed could influence regulators implement a major financial overhaul law called Dodd-Frank. How hard regulators crack down on bank could have a big impact on the stability of the financial system.

Here are answers to some questions about the loss:

Q: How exactly did the bank lose so much so fast?

A: First, start with the irony. JPMorgan says the losses came from a trading portfolio designed to offset losses in the bank’s lending business. Instead of offsetting losses, these so-called “hedges” added to them.

JPMorgan extends money to companies through loans and by buying bonds. The bank was worried that it might not get all its money back, so it bought protection. Though it didn’t detail how it did this, banks typically buy credit default swaps, essentially insurance contracts that pay out when companies stiff their lenders.

It gets more complex. In the often dizzying, Alice-in-Wonderland world of banking, these hedges are themselves sometimes hedged, and that’s exactly what JPMorgan did. The bank apparently thought it had bought too much protection, so it hedged its hedge.

It’s that second hedge, basically a bet that companies would pay back their loans, that led to the losses.

Q: How does the “London Whale” figure into the story?

A: News reports before the bank announced its loss said that a trader at the bank dubbed the “London Whale” had invested heavily in an index of credit-default swaps, and that the bets were producing losses. But in a conference call Thursday, Jamie Dimon, the CEO of JPMorgan, said the news reports about London trades were only “somewhat related” to the losses. He provided no other details.

Q: Why are other bank stocks falling on the news?

A: It’s not just the size of the bet that’s scaring investors, but its complexity. The fact is, not even experts know how precisely big banks make money, and occasionally lose it. Their wagers are largely hidden. The opaqueness, which investors normally shrug off, is spooking them now.

Investors are uneasy also because JPMorgan has a reputation of managing risks better than almost anyone in the business. Investors seem to be asking: If this bank can lose $2 billion in six weeks, maybe others can, too?

Finally, there’s the regulatory threat. The loss comes amid heated debate in Washington over just how tightly to regulate banks. “The timing of the JPMorgan announcement couldn’t be worse,” said Whitney Tilson, head of hedge fund T2 Partners, speaking at an industry gathering in Las Vegas.

Investors fear that bank profits could be pinched by the so-called Volcker Rule restricting trading that banks do with their own money, as opposed to clients’ funds. Dimon has been an outspoken critic of the rule, and an impactful one given his skill at navigating his bank in recent years. JPMorgan was the only bank to remain profitable during the 2008 financial crisis.

Now that Dimon has been pushed off his pedestal, investors are worried that regulators will be tougher in enforcing the new rule.

Q: Isn’t the trading that led to the loss banned already?

A: No. The rule doesn’t take effect until July, and even then regulators are suggesting banks will have another two years to comply.

In any case, it’s not clear that the trade in question were subject to the rule. In the conference call Thursday, Dimon said the trades that backfired were hedges, not bets for profit, so they wouldn’t have fallen under the rule.

But some experts have doubts.

Nancy Bush, a banking analyst at NAB Research, says it’s not always clear what is hedging and what is gambling. The size of JPMorgan’s loss makes her suspicious.

“So they made money on hedges and then they hedged some more,” she said. “At some point it goes from being a hedge to being a money maker. They crossed the line here somewhere and it’s going to cost them.”

Sen. Carl Levin from Michigan, the chair of a subcommittee that investigated the crisis, put it more bluntly. “This is not a hedge,” he said. He called the loss a “stark warning” about the danger of “risky bets” at banks.

Q: How much will the trading loss hurt JPMorgan?

A: Likely not much at all, putting aside the impact of tougher regulation. JPMorgan is a big money maker. The $2 billion loss, which is before accounting for taxes, compares with $19 billion in net income last year and $16 billion the year before that.

What’s more, Dimon said that $2 billion loss will be offset by $1 billion trading bets that have already paid off. Dimon said there are $7 billion more paper gains from trades that he can tap in case losses grow.

Q: Are more losses possible?

A: Dimon said he is trying to unwind the bad bets in a “responsible” manner to minimize losses, but prices can move against him. That would mean more losses. Dimon has said the $2 billion could become $3 billion depending on how markets react.

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Hundreds of Japanese are marching and waving “No nukes” banners to celebrate the last of this nation’s 50 nuclear reactors switching off.

The crowd at a Tokyo park Saturday said they were not concerned about government warnings of power shortages.

One of three reactors at Tomari nuclear plant in the northern island of Hokkaido is going offline for routine maintenance checks.

After last year’s March 11 quake and tsunami set off meltdowns at Fukushima Dai-ichi plant, no reactor stopped for checkups has gone back up personal business card. Japan requires new tests on withstanding quakes and tsunamis, and it needs local residents’ approval to restart reactors.

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Defying expectations, Congress has reached the homestretch on a major overhaul of federal transportation programs that is critical if the nation is to avoid steep cutbacks in highway and transit aid.

The bill is driven partly by election-year politics. Both Congress and President Barack Obama have made transportation infrastructure investment the centerpiece of their jobs agendas. But the political imperative for passing a bill has been complicated by House Republicans’ insistence on including a mandate for federal approval of the Keystone XL oil pipeline. The White House has threatened to veto the measure if it retains the Keystone provision.

And there are other points of disagreement between the GOP-controlled House and Democratic-controlled Senate, including how to pay for transportation programs and how much leverage the federal government should have over how states spend their aid money. Transportation Secretary Ray LaHood has said it’s unlikely Congress will pass a final bill until after the November elections.

Despite LaHood’s pessimism, lawmakers and transportation lobbyists said they believe prospects are improving for passage of a final bill by June 30, when the government’s authority to spend highway trust fund money expires. The fund, which pays for roads and transit, is forecast to go broke sometime next year.

A House-Senate conference committee is scheduled to begin formal negotiations May 8.

It has taken Congress years to get this far. Work on a transportation overhaul began before the last long-term transportation bill expired in 2009. The Senate finally passed a $109 billion bill with broad bipartisan support in March. The bill would give states more flexibility in how they spend federal money, step up the pace of road construction by shortening environmental reviews and impose a wide array of new safety regulations.

House Republicans, after failing to corral enough votes to pass their own plan, recently passed a placeholder bill that allows them to begin negotiations with the Senate. That bill included the Keystone provision, as well as provisions limiting the public’s ability to challenge transportation projects on environmental grounds and taking away the Environmental Protection Agency’s power to regulate toxic coal ash.

“I feel like people are worn out on this issue and would like to get something done,” said Jeff Shoaf, a lobbyist with the Associated General Contractors of America, a trade association for the construction industry. “I think the prospects are good.”

Winning approval of the Keystone provision, which would give federal regulators no choice but to approve a pipeline to transport oil from Canada’s tar sands, appears to be House Speaker John Boehner’s top priority, lawmakers and transportation lobbyists said instant payday loan.

Republicans portray Obama’s delay in the pipeline as a contributor to high gasoline prices. “Boehner wants to push Keystone as hard as he can because he sees it as a political winner,” said Joshua Schank, president and CEO of the Eno Center for Transportation, a nonprofit foundation dedicated to improving transportation.

Senate Democratic conferees on the bill appear to have enough votes to block inclusion of the Keystone provision in the final product. Sen. Jay Rockefeller, D-W.Va., one of four Senate committee chairmen responsible for a portion of the bill, has announced he’ll oppose Keystone and other House environmental provisions.

An open question is whether House Republicans will balk on an overall transportation bill if they can’t get Keystone. Similarly, despite their public statements, it’s unclear whether Senate Democrats would be willing to sacrifice the bill in order to block a Keystone provision, and whether Obama would follow through on his veto threat, especially if the Keystone language were softened in negotiations.

The president painted a bleak picture of America’s infrastructure in a speech Monday to union workers in the construction industry, saying U.S. highways are clogged, railroads are no longer the fastest in the world and airports are congested. A transportation construction bill would boost employment and the economy, but “the House Republicans are refusing to pass a bipartisan bill that could guarantee work for millions of construction workers,” Obama said, referring to the Senate bill.

“Instead of making the investments we need to get ahead, they’re willing to let us all fall further behind,” he said.

The transportation bill “is incredibly important to the president,” said Ed Wytkind, president of the transportation trades department of the AFL-CIO.

Both sides ultimately must decide whether they want an issue to be used as a campaign weapon or an accomplishment they can tout to voters.

Dave Bauer, a lobbyist for the American Road and Transportation Builders Association, cautioned against reading too much into what congressional conferees say at this point.

“Before they even get to a conference table, some seem to be trying to make this all about Keystone, and it’s not,” he said.

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Germany’s finance minister says he’s confident a German-backed pact enforcing more fiscal discipline among European governments will be ratified despite new political uncertainty.

Wolfgang Schaeuble said that the treaty “will be ratified in all countries, I have no doubt about that.”

French Socialist Francois Hollande, who led in the first round of president elections Sunday, has called for renegotiating the pact.

Meanwhile, the Netherlands faces early elections after its minority government collapsed over a failure to agree on austerity measures needed to bring the country’s deficit within EU-stipulated limits.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

BERLIN (AP) _ Germany mounted a spirited defense of its pro-austerity stance on Tuesday, with both Chancellor Angela Merkel and her foreign minister calling for a continued drive for fiscal discipline across Europe in spite of the latest bout of political uncertainty.

Investors took fright of the 17 countries that use the euro Monday on concerns that the so-called fiscal compact of strict austerity and deficit controls agreed by European leaders earlier this year was beginning to unravel.

French Socialist Francois Hollande edged ahead with a narrow lead in Sunday’s first round of presidential elections with a pledge to renegotiate the pact to give greater emphasis to growth over austerity. Meanwhile, the Netherlands faces early elections after its minority government collapsed over a failure to agree on austerity measures.

On top of this, Spain _ which is currently going through a harsh program of cuts and tax increases _ announced it was entering a recession and a survey of purchasing managers across Europe pointed to a contraction in the region’s economy.

Merkel didn’t specifically mention the fiscal pact in a speech in Berlin but noted that, in its early years, West Germany ran up barely any debt. She said that “today, we have to get back to that situation.”

“One can talk about how we do it … but to act as though it were an imposition to get by with what we are earning, (to say) we will carry on carting around the rucksack with debt _ no one will accept it from us, in any European country,” Merkel said.

“I want to say clearly, it is not the case that we say saving solves every problem but, if you at home talk about how you want to shape your life tolerably, then one of the first conditions is that you somehow get by with what you earn,” she said.

Germany’s budget deficit is well under the limit of 3 percent of gross domestic product that eurozone countries are supposed to observe, but its total debt amounts to 81.2 percent of GDP _ well above the official 60 percent limit.

Germany and France, under incumbent President Nicolas Sarkozy, have piloted rescue efforts for other eurozone countries as the region has been swept up in a succession of debt crises over the past two years. Berlin has insisted on an often-criticized emphasis on budget discipline and cuts.

Merkel pushed hard for other European countries to agree to the fiscal compact, designed to limit government overspending, and 25 national leaders signed it earlier this year.

Foreign Minister Guido Westerwelle said Tuesday that “we agreed on the pact after long negotiations. It is necessary.”

“What we have agreed on in Europe to overcome the debt crisis is agreed and it holds. It will not be made dependent on election results,” he said. “Governments act for their countries and not for themselves.”

It isn’t yet clear when the German Parliament will vote on the pact, which needs a two-thirds majority in Parliament.

That means it needs the support of the main center-left opposition Social Democratic Party, which wants the government to agree to introduce a financial transaction tax _ though leaders have stopped short of saying that is a condition.

Merkel’s government aims to get the fiscal pact passed before the summer. Social Democrat leader Sigmar Gabriel has argued that a vote could take place later.

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It will soon be easier for small companies to raise money just like behemoths on Wall Street.

More access to fundraising, new investors and fewer regulatory burdens are all part of the Jumpstart Our Business Startups bill, which President Obama signed into law Thursday.

The JOBS Act, which received bipartisan congressional support, provides small businesses that need capital with many options that were previously out of reach. The provisions are aimed at helping fast-growing operations like biotech and tech companies, but mom and pop shops may benefit as well.

The Securities and Exchange Commission has several months to pass regulations fully implementing the law.

For startups or entrepreneurs in need of initial funds to launch an idea, the law redefines crowdfunding.

8 crowdfunding sites to watch

Previously, platforms like Indiegogo or Kickstarter offered companies a way to raise money from everyday folks. But contributors couldn’t buy shares in a company itself and take part in its profits and losses.

The new law allows a company to use crowdfunding for seeking actual investors. It can raise up to $1 million this way. To protect investors, those with a net worth of less than $100,000 may now invest 5% of their yearly income or $2,000, whichever is higher. Wealthier types can invest up to 10% of their income.

"There’s more reason for an investor to give them money," said Matthew Kaplan, a capital markets lawyer in New York. "They’ll get a piece of the upside."

Crowdfunding helped San Francisco clothing and accessories company Solz raise thousands in donations in the past. CEO Brad Carrick expects the new law will open up the possibility to sell small shares of his company for $1,000 to $10,000.

"When you pull these people together, you can get a mini-angel investment round," said Carrick, referring to venture capital that plays a crucial role in funding startups.

Several parts of the law are also aimed at helping a well-established small business more easily find accredited investors, those with a net worth of $1 million excluding the value of their primary residence. The law lifts a ban on advertising to the general public about investment opportunities, no longer forcing companies to hire brokers.

"That’s huge. When you’re talking about a small business with 30 employees, you don’t have time to establish those connections to bring in chunks of money," said Molly Brogan, spokeswoman for the National Small Business Association, which lobbied for the law’s passage.

Meanwhile, critics such as the AARP, a lobbying group for seniors, oppose lifting the advertising ban, worried it will lure in unprepared investors and lead to fraud.

Does JOBS Act = New banks?

Finally, for companies in later growth stages, the law eases the process for publicly selling stock.

Having 500 investors or raising $5 million previously forced a company to register with the SEC — a costly endeavor. Filling out stacks of legal forms and undergoing independent accounting audits can cost hundreds of thousands of dollars. The law loosens requirements for most companies by raising several thresholds.

A company with $10 million in assets will now have to register with the SEC when its number of investors reaches 2,000, including 500 who don’t meet the "accredited" wealth requirement. And companies with less than $1 billion in annual revenue can enter a five-year phase-in plan with the SEC.

Kaplan said that will let small companies on their way up retain the strength they need to survive the trip.

"It enables you to gestate longer," Kaplan said. "History is littered with examples of startups that went public and crashed and burned, because they didn’t have time to develop processes or market presence to sustain themselves as a public company."

That provision is welcomed by Boulder, Colo., software developer Rally Software, which has spent more than $1 million in accounting fees since 2010 to maintain the option of going public. The CEO of the 300-employee company, Tim Miller, said the JOBS Act would make the process less expensive. 

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The number of people filing for unemployment benefits fell last week, pointing to continued job growth in March.

The Labor Department reported that 357,000 people filed for their first week of jobless claims, falling roughly in line with economists’ expectations. That marks a decrease of 6,000 initial claims from the week before.

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Obama battles job crisis

The U.S. lost 4.3 million jobs in President Obama’s first 13 months in office. Track his progress since then.

Amid the worst of the recession in 2009, Americans at one point filed as many as 659,000 claims in one week. Since then, the job market has come a long way, albeit gradually cash advance loan.

Initial claims are now near levels not seen since April 2008, a sign that layoffs are slowing and hiring is picking up.

"Initial claims continue to head in one direction and that’s what makes it beautiful," said Jennifer Lee, a senior economist with BMO Capital Markets.

Weekly jobless claims can be volatile, so economists often prefer to look at the average number of claims over a four-week period. That figure also fell.

Meanwhile, about 3.3 million people filed for their second week of unemployment benefits or more in the week ended March 24, the most recent data available. That’s marks the lowest since August 2008.

Unemployment rate: How low can it go?

The downward trend in unemployment filings raises hopes that employers continued hiring at a strong pace in March. The Labor Department is scheduled to release the latest update on job growth and the unemployment rate on Friday morning.

Economists surveyed by CNNMoney expect that report to show employers added 200,000 jobs in March and the unemployment rate fell to 8.2%.

In February, the economy added 227,000 jobs. 

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Bentley Motors Ltd. and Rolls-Royce Motor Cars Ltd. are preparing to be occupied by India

Hong Kong picks its new chief executive today, after a campaign marked by personal scandals, public discontent over a widening wealth gap and protests for greater democracy.

A 1,193-member committee of billionaires, including Hong Kong

China had its largest trade deficit since at least 1989 last month as Europe