I agree 100% with Meredith Whitney when she says that the JP Morgan (NYSE:JPM) trades were prop trades. It is rare for me to agree with Whitney but calling them anything else would simply be inaccurate. A greater question is whether or not there is anything wrong with this. I don't have a problem with banks investing a portion on of their own capital, but I do believe that these types of leveraged bets, on relatively illiquid, and opaque securities does nothing to help the financial system. Cleaning up these "dark pools" would be much more productive than much of the other regulatory hysteria which has only hurt lending and economic growth.
Disclosure: I am long JPM.