Over a year in the making and we've finally just about gotten some final form of financial regulatory reform from Congress. The House passed the bill Wednesday night, leaving the Senate to vote on the bill after the July 4 recess. There is a chance that the bill could change again if the Senate doesn't have the votes to pass the bill in its current form. But chances are the bill will stay pretty close to its current form.

With that in mind, will the bill prevent future crises? Will the taxpayers ever have to bail out an AIG (NYSE: AIG) or Citigroup (NYSE: C) again? Will the banking system be stronger, yet not increase the cost of credit for Americans? I asked the following four experts – two bank CEOs and two professors – for their thoughts on the Wall Street Reform Bill:

  • Charles Geisst, professor of finance at Manhattan College who called the market crash four years prior in his book Undue Influence: How the Wall Street Elite Puts the Financial System at Risk.
  • Keith Hennessey, fellow at the Hoover Institution, professor at Stanford Business School, and former Assistant for Economic Policy and Director of the National Economic Council under President George W. Bush.
  • Kelly King, Chairman and CEO of BB&T (NYSE: BBT)
  • Mariner Kemper, Chairman and CEO of UMB Financial (Nasdaq: UMBF)

Here are their opinions.

Charles Geisst: Although it is a bit early to determine the impact of the new financial reforms soon to be passed by Congress, it is not too early to say that there are too many of them. That alone would make them difficult to enforce. The reform covers too much ground and appears that it covers it very thinly. The bill is very ambitious but it misses the mark. A comprehensive bill could be avoided by simple surgery: roll back the financial modernization of 1999.

The 1999 law emasculated Glass-Steagall and led to two crises -- Enron and the current recession. If the old Glass-Steagall wall were to be re-erected, investment banks and commercial banks would be separate again and risk taking would move back to the securities houses. They would be much more sober without access to federal funds and crisis funds and the level of speculation would decline.

But under the Volcker rule, the new law proposes that the major banks have up to ten years to divest themselves of hedge funds and private equity. That is laughable by any account. Mr. Volcker should be able to see the fruition of his rule within his lifetime. The current crisis requires a root and branch demolition of the 1999 law, not more legislation added to the top of it. The confusion will be massive and the potential for a new crisis will not have diminished one bit.

In short, simplicity must be the order of the day and this bill is anything but simple; but its bite lacks teeth. Like health-care reform, this bill is being drawn up to grab headlines but its details betray it as nothing more than a slap on the wrist for Wall Street. It is true that Wall Street can commit grand theft and apparently get off with nothing more than community service.

Keith Hennessey: The most important component of the bill is the new legal authority for authorities to resolve in an orderly manner large financial institutions that in 2008 were deemed to be too big to fail. As long as policymakers believe they have no option but to prevent certain large financial institutions from failing, we will always be vulnerable to a repeat of 2008. This policy change is complex and essential.

The core problem is that under this legislation there will still be too-big-to-fail institutions. If everything works perfectly, those institutions will be less likely to fail than they were in the past, and the rescue plan for when they do fail will be smoother. But in government everything does not work perfectly, even if regulators have additional information and new authorities. At some point there will be another Bear Stearns, another Lehman, or another AIG. Supervisors will once again miss the warning signals and will have to step in to prevent a disorderly failure.

If this bill becomes law those supervisors will have the tools to address a failure more cleanly, but they may still have to put up taxpayer funding to prevent a systemic collapse. It is therefore at tremendous overstatement to suggest that this bill would prevent future crises or even prevent future bailouts. It will instead (I hope) reduce the chance of future crises and maybe make the rescue effort smoother and less expensive. Have we reduced the likelihood of a repeat of 2008 from 1 in 50 to 1 in 500 or to 1 in 5 million? We don't know, but we have not eliminated that risk.

At the same time the bill ignores the costliest institutional failures, Fannie Mae and Freddie Mac (NYSE: FRE). Even if this bill becomes law, taxpayers will continue to bleed billions of dollars each month while the government-sponsored enterprises remain on life support. I have difficulty understanding how one can claim victory with a bill that leaves the biggest ongoing institutional failures entirely unaddressed and suggests no future solution for them.

Kelly King: We support regulatory reform and we are committed to do what we can to make this legislation work because it makes our financial system stronger. There is a lot we support in this bill and some things we disagree with. But the legislation is nearly complete, and all parties will have greater certainty. We have not seen the details yet but in general we support:

  • Systemic oversight
  • Consumer protection
  • Resolution authority
  • Credit rating agencies
  • A clearinghouse for derivatives
  • Mortgage reform, especially strong underwriting standards
  • The Volcker Rule and derivatives-allowing companies to manage their own risks

Until more details are disclosed we see potential challenges ahead related to:

  • Reduction of capital, as it relates to trust preferred securities
  • The Volcker Rule, as it relates to private equity
  • Reduction in competitiveness with foreign banks
  • Consumer protection – while we absolutely support consumer protection, we hope that the new agency will proceed with its mission with consideration for the safety and soundness of the banking system
  • Avoiding unintended consequences

Overall, we think it is time for our industry to move forward with a renewed focus on helping our clients make informed financial choices and supporting businesses to create jobs. 

Mariner Kemper: This will hopefully end the too-big-to-fail issue and ensure future failures can be addressed quickly without burdening the taxpayer. However, this is overshadowed by our thoughts centered on compliance with the new Consumer Financial Protection Agency and the unfortunate shift in interchange practices. Regulating interchange will be costly to the industry because it diminishes a revenue stream that helps pay for the infrastructure, fraud, legal costs, etc., of providing the interchange system for retailers. The only good news is that it will be housed within the Federal Reserve, an entity that understands banking.

While a resolution authority is in place, a bigger concern is whether the Systemic Risk Council, which was also established, will have the political will to address risks in advance of a crisis.

For another roundtable, check out: One Stock Investors Are Overlooking -- but Shouldn't

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.