"I think the only major financial institution that Glass-Steagall would have a major effect on is probably Citi, which still has some of the supermarket elements," Bernanke added. Bernanke: I'm 'puzzled' by the focus on Glass-Steagall

Ben Bernanke is "a little puzzled" by the focus of some Democratic presidential candidates on reinstating the Glass-Steagall Act as a means of regulating or breaking up financial institutions, the former Federal Reserve chairman said Wednesday.

Democratic candidates Bernie Sanders and Martin O'Malley have pledged to reinstate the Depression-era act that created a separation between commercial and investment banking, and was repealed in the 1990s when Bill Clinton was president. Hillary Clinton's proposal for Wall Street reform does not include an explicit call for the break-up of so-called "too big to fail" financial institutions.

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"I'm actually a little puzzled by the focus on that particular provision," Bernanke said during a discussion with POLITICO's Ben White at an America's Fiscal Future event in Manhattan. "I think that if you look at the actual, what happened a few years ago in the crisis, that Glass-Steagall was pretty irrelevant to it because you had banks like Wachovia or [Washington Mutual] that went bad because they made bad loans, and you had investment banks like Bear Stearns and Lehman that went bad because of their investment banking activities."

Even if Glass-Steagall were still in place at the time of the financial crisis, "it would have had no effect on most of these firms," he said, including AIG, which required massive and repeated bailouts.

"I think the only major financial institution that Glass-Steagall would have a major effect on is probably Citi, which still has some of the supermarket elements," Bernanke added.

For the most part, though, he remarked, "it would just be an example of breaking up firms for the purpose of breaking them up without a clear rationale for doing that. I think there are other ways to simplify banks that would be more effective."

Part of that, Bernanke said, is simplifying banks to make them smaller and more efficient.

"We are moving towards a situation where banks are now evaluating their own size and complexity in light of the fact that on the one hand, there are economic benefits to size, but on the other hand, it's becoming much tougher to be a big bank," he said, referencing the fact that larger banks "are trying to shrink" because they do not want to hold as much capital as is required of the largest institutions.

"You put the incentives in the right place and force banks to think about whether their size and complexity is justified in an economic sense, or whether it basically could be dispensed with and you could get simpler banks. I think over time, the pressure will be on banks to simplify," he added, touting the example of the liquidation authority under the Dodd-Frank Act that gives regulators the ability to more cleanly unwind a bank on the brink of collapse.

"Just breaking them into tiny little pieces, you're going to lose a lot of value if you do that, without thinking about what the economics is," he added.