The JPMorgan Chase $2 billion trading loss will probably reach $6 billion or $7 billion, reports CNNMoney, citing people working on trading desks and sources with knowledge of the bank's positions.

JPMorgan suffered the huge loss because of bad bets on derivatives based on corporate bonds, CNNMoney notes. The bank sold protection against corporate-bond defaults which might have earned money if the market had continued to improve.

It didn't.

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

JPMorgan will have to pay even more for the protection as the market declines.

Hedge funds on the winning side of the bet are unlikely to let the bank escape without more losses, the sources say. They've increasingly taken the other side of the bank's losing bet since its predicament became known.

The bank has yet to sell any of its positions, but when it starts, CNNMoney reports, hedge funds will be quick to buy protection and drive up the cost of selling it.

A main problem for the bank is that because it's essentially the only party on its side of the bet, it's harder for it to offset losses elsewhere.

For now, hedge funds are waiting for the bank to act in a type of financial staring contest. But JPMorgan, facing investigations by the Securities and Exchange Commission and FBI, shareholder uneasiness, and congressional questioning, may be forced to blink first, CNNMoney predicts.

Many experts say the trading debacle shows the need for strong financial regulation.

It's not acceptable for banks to take such risky bets because they put the whole economy in jeopardy — unless they can count on being bailed out, writes economist Paul Krugman for The New York Times.

"And the prospect of such bailouts, of course, only strengthens the case that banks shouldn’t be allowed to run wild, since they are in effect gambling with taxpayers’ money," Krugman states.

Meanwhile, JPMorgan CEO Jamie Dimon reportedly "couldn't breathe" upon discovering the magnitude of the botched trading strategy that lost the bank billions of dollars, sources close to the famed executive have told The Wall Street Journal.

"I want to see the positions!" Dimon barked, throwing down papers, the Journal reports. "Now! I want to see everything!" Upon seeing the numbers, source say, Dimon couldn't breathe.

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.