Critics of big banks have raised "a legitimate question" of whether the marriage of commercial and investment banking is too unwieldy, a former JPMorgan Chase (JPM) executive said Wednesday night.

Heidi Miller, who retired as head of JPMorgan's international businesses in February after an executive shake-up last year, defended the utility of large, diversified financial services companies — and criticized the industry for not doing a better job of defending itself. Yet she acknowledged that some companies run the risk of becoming too big.

The big banks haven't answered the question of "at what point does scale also breed diseconomy, or diseconomies of [being] too large. So that's a legitimate question and I don't think the banks have actually answered it well," Miller said in an interview after a panel discussion in New York City.

JPMorgan Chase is currently the country's largest bank by assets, and Miller's former boss, Chief Executive Jamie Dimon, has been one of the most vocal defenders of the megabanks. He and other bankers have argued that the biggest banks, with both investment and commercial arms, are the only companies that can provide sophisticated financial services to a wide range of business and government customers, including big loans, global cash management and deal advice.

Miller agreed with that argument on Wednesday — to a point.

"The premise of putting …businesses together to get leverage and synergies across those businesses actually bears out," she added. "Whether we've passed that in terms of absolute size, we haven't argued well enough for me to answer, at least positively, that it's a diseconomy."

Miller cited some of the industry's arguments that the big banks can offer diversified, all-in-one services that smaller commercial or investment banks can't handle with the same efficiency. But banks need to get better at making that case, she said.

"The largest banks have done themselves a disservice by not making it clear what the benefits are from their many diversifications, across different businesses that naturally use certain systems, whether it's a market that uses a branch, asset management that uses client services or investment banking that uses custodial services," Miller said.

"I don't think we've made that as clear an argument &mdasb; the largest banks have not made that as clear as they can," she added.

The debate over banks' size and diverse businesses was revived this summer by former Citigroup (NYSE: C) CEO Sandy Weill, who is credited and blamed with creating the modern megabank at Citi. After the financial crisis destroyed or hobbled many big banks, bringing Citi to the brink of failure and forcing it to drastically cut back its size and operations, Weill this summer threw his support behind the idea of separating commercial and investment banking.

Miller, who worked for Weill at Travelers Group and Citi, was not very impressed Wednesday with his change of heart.

"Sandy's confusing two things. He's confusing his bad management decisions from an underlying strategy," she said.

Miller, who last year accepted a lifetime achievement award as one of American Banker's most powerful women in banking, spoke Wednesday on a panel about women and Wall Street that was hosted by the New America Foundation.

Her remarks about big banks were less stinging than those of Sallie Krawcheck, a former chief financial officer at Citigroup and global head of wealth management at Bank of America (BAC), in the June issue of the Harvard Business Review. Large banks are still too complex and still too prone to take undue risks, Krawcheck wrote in an op-ed, which also recommended several reforms to pay and governance.

"Boards need simple and commonsense — but powerful — tools to cut through the complexity and push management behavior in the direction of responsible risk taking," she wrote.

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