On Thursday, Congress sent President Obama a financial reform bill aimed at preventing another financial crisis. So what does the bill mean for Wall Street? And what will the new regulations mean for Wall Street banks that make big money by trading on their own accounts? I recently asked Roger Lowenstein, a contributing writer for The New York Times and the best-selling author of five books, including Buffett: The Making of an American Capitalist and When Genius Failed. His new book is The End of Wall Street.

Mac Greer: Looks like we are going to have passage of financial reform. Do you think the financial reform legislation will mean the end of Wall Street as we know it?

Roger Lowenstein: I think we already have a different Wall Street. I think we have a slower growth Wall Street. I think we have less leverage at the big banks, the investment banks, which will be enforced by some combination of legislation and by whatever the international crowd does. I think we are all kind of very nervous about state pension debts and those sorts of sovereign debts. I think it is a very different; I have heard people say, Gee, this seems like old times, but it doesn't feel like 2007 to me when people were happy about everything and the Dow was at 14,000, so I think we are already in a period to me that feels maybe more like the seventies of chronic tugs and pulls in different directions, but all sorts of economic issues weighting people down, problems weighing people down.

Greer: And Roger, let's talk about some of the provisions in the financial reform legislation. It includes greater regulation of derivatives and regulation of "too big to fail" institutions. We've got new restrictions on banks regarding their proprietary trading and hedge fund activity. The reforms give regulators a lot of discretion. Which piece of the legislation do you think will pack the most punch, and what part of the law scares you the most?

Lowenstein: I think the Consumer Protection Agency is potentially dangerous because it is in the Fed. The Fed's job is to protect banks. Elizabeth Warren or whoever is running that agency, their job is to protect consumers. I am a little bit afraid of cross-purposes. If you have banks that are very well-regulated from the standpoint of protecting the bank's own shareholders and capital, they shouldn't be making abusive loans. They shouldn't be making loans to people who can't pay it back.

If you think of what consumer advocates were saying before the crash, they were saying, "Hey, we need more credit, we need more subprime loans, etc." I am not sure that their interests, or the way their interests often are articulated, are consistent with the interests of banking soundness and safety and I think that ought to be the primary purpose of legislation reform.

Greer: And Roger, there is a recent article in the Wall Street Journal that talked about how some of the bigger Wall Street banks like Citigroup (NYSE: C) and Morgan Stanley (NYSE: MS) were trying to find new positions for their best proprietary traders, and the article went on to quote the president of Goldman Sachs (NYSE: GS), who said that Goldman, who obviously is very active in proprietary trading, would have to get out of the "pure prop trading business." So my question is, do you think the government can really effectively regulate proprietary trading or will Wall Street find a way to redefine it and skirt the new regulations?

Lowenstein: You know, that is a good question and I think for a firm like Goldman, this is really going to be problematic. You can skirt a rule around the margins, but when so much of your existence is all about prop trading, you are not going to be able to squeeze the whole firm, or a good part of it thereof, through a loophole. I think what they are going to face is a decision. Do they want to, so-called "unbank," give up their bank charter so they can go back to prop trading or do they want to go back to the business that Goldman was storied for, which was investment banking, selling stocks, selling bonds, raising capital and so forth, which is not the bulk of their profitability anymore. So do they go back to the old-time Goldman or do they just become an investment bank and a hedge fund, which is really what they have been in everything but name since they became a bank holding company during the crash, so I think this is going to be problematic for Goldman.

For more on the banking industry, check out A Big Quarter for Bank Stocks: Here's What to Expect.

Mac Greer does not have a financial position in any of the stocks mentioned in this article. The Motley Fool has a disclosure policy.