Alan Greenspan, a former Federal Reserve chairman, believes the U.S. government made a big mistake with its "too big to fail" policy after the 2008 financial crisis, saying he favored letting drowning banks sink into Chapter 11.

"I would like to see all institutions go through Chapter 11 if they get into trouble," Greenspan said Tuesday during a lunchtime Q&A session at the Securities Industry and Financial Market Association's annual meeting in New York. "We don't allow that to happen anymore. If you try to prevent it, you run into all kinds of serious troubles."

Looking at what he termed "the greed of Wall Street," Greenspan was certainly more outspoken in sharing his thoughts about the U.S. markets than he ever was during his 1987-2006 tenure as Fed chairman.