Investing.com -- Days after Jamie Dimon made his case on why JP Morgan Chase should remain as a single institution, Federal Reserve Bank of St. Louis president James Bullard weighed in on the topic in an appearance on CNBC's Squawk Box on Thursday.
Dimon, the CEO of JP Morgan Chase, has argued vigorously in recent weeks that the nation's largest bank should not be divided into separate entities as has been suggested by its competitors, as well as reporters and analysts over the last few months.
"I don't want to step in and tell them you have to get rid of this or that," Bullard told CNBC. "I want to let the CEO make the decision, then the Board of Directors."
Speaking more broadly on the topic, Bullard indicated that large banks have to weigh the argument of scale economies versus financial stability.
"If you have a lot of smaller firms, a milieu of smaller firms you wouldn't have the scale factor, but you would have a lot more innovation. If you have 20 or 30 smaller firms instead of five, they can innovate, they can specialize in different ways."
"If they do something wrong you can let them fail and it doesn't come to bite us all. It's a better model."
The idea has gained steam since December when the Fed introduced a proposal to place increased capital requirements on the bigger banks. Last year, JP Morgan listed record net profits of more than $21 billion. The proposed rule could force JP Morgan to hold 4.5 percent more in capital than an average bank.
Dimon has argued that the U.S. financial markets could take a hit globally if some of the bigger banks were forced to break up.
"Being the largest systemic bank does not mean we are the riskiest," Dimon said.