Romney adviser throws cold water on big bank breakups

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Federal Reserve Governor Daniel Tarullo caught Wall Street's attention earlier this week, when he delivered a speech calling for Congress to consider enacting limits on bank size as a portion of U.S. gross domestic product. Tarullo is a point person for regulation at the central bank, and his remarks in Philadelphia for bank caps make him the highest-ranking official to push the idea.

But Hubbard, thought by many to be a leading candidate to replace Ben Bernanke as Fed Chairman under a Romney administration, contended that coming up with a workable cap would be a tall task.

"I understand Dan Tarullo gave those remarks. I disagree with them. First of all I'm not quite sure what a cap would be and how I would figure it out," Hubbard said in response to a question at a National Association for Business Economics conference, according to Reuters.

"If the market forces say these banks are too big and too complex, they will be whittled down to size. And I think that's a much better [solution] than arbitrary limits on bank sizes," he added.

The notion of breaking up the nation's biggest banks has made for some unique compatriots on and off Capitol Hill. Sens. Sherrod Brown (D-Ohio) and David Vitter (R-La.), who see eye to eye on little, have joined forces to press regulators to crack down on the nation's largest banks, including tougher capital requirements.

Thomas Hoenig, vice chairman of the Federal Deposit Insurance Corporation (FDIC) and Richard Fisher, president of the Federal Reserve Bank of Dallas, have called for a bank breakup. 

And Sanford Weill, the former chairman and CEO of Citigroup, shocked Wall Street in July when he made a dramatic about-face and called for the nation's largest banks to be pared down, specifically adding investment banking should be split from traditional bank activities. Under Weill, the bank Citicorp merged with the financial firm Travelers Group to form Citigroup, one of the first of the Wall Street giants now driving this anxiety.