Meredith Whitney was just on CNBC's Closing Bell talking about Sandy Weill's shock announcement that he believes the banks should be broken up.

You won't be surprised to know that the famed research analyst agrees with Weill — she thinks the supermarket business model for banking simply doesn't work, and that a reconstruction is in order.

But that doesn't mean she thinks that the government needs to take a hacksaw to The Street. Quite the contrary, she says the market is forcing the saw already. The banks are over capitalized and sluggish, and they've destroyed pricing in products like credit cards and home equity loans by emphasizing securitization and capital markets.

That's right — Whitney says the most profitable portions of the business are not fancy. The profitable parts are small sectors like asset management that have high fees and are not capital intensive.

"You can make great money in a utility type of business by borrowing cheaply and lending sensibly but that's not what's being done. The basic bank model has, is, and will be attractive. It's just you're combining everything and undercutting pricing in one place and trying to make up for it, effectively having loss leading businesses... it's not a business that works."

Strong words — and then she really dug in.

"You're either making money or you're not. If you're not making money get out of the business."

Ouch.