The man who sold Merrill Lynch during the financial crisis told CNBC that "too big to fail" banks are still a reality in today's market and the problem is simply too complicated to solve.
"I think we have not solved too big to fail," John Thain told "Squawk on the Street" on Monday. "If anything, the biggest banks are bigger than they were five years ago. ... We still have the issue of how to deal with too big to fail banks."
"The higher degree of capital the banks are required to hold now is helpful, but it's certainly true that the biggest financial institutions both in the U.S. and globally are still too big to fail," said Thain, who holds the top spot at CIT Group. "I think it's very difficult to solve that problem."
Thain was the last CEO of Merrill Lynch, managing the company during the financial crisis and overseeing its sale to Bank of America. Thain left BofA shortly after the Merrill sale.
Although "it's very unfortunate" that Merrill had to be sold, Thain said, "it was the right thing to do: It protected the Merrill shareholders, it protected Merrill employees."
Since the financial crisis, Thain said, the economy has "done reasonably well recovering" and the deleveraging of companies and consumers has put the U.S. "in a safer spot."
(Flashback to 2011: John Thain on the financial future of the U.S. )
"The economy is growing, it's growing slowly, but it's not creating a lot of jobs," he said, chalking up the lag in job creation to the unwillingness of middle-market business owners to increase expenditures, despite being generally optimistic about their business prospects.
Thain also said that one of the biggest issues in the U.S stock market is the fragmentation of the broader industry. "You can trade stocks 50 different places. Most of these places are not very transparent and that's a problem. It's really not good for consumers, it's not good for individual investors. You can't see where a lot of the stocks trade and there just isn't the volume here that there used to be."
- By CNBC's Paul Toscano. Follow him on Twitter @ToscanoPaul and get the latest stories from "Squawk on the Street"