The following is part three of a three-part interview. (Part one dealt with derivatives and the Volcker rule, part two dealt with the problem of "too big to fail" and regulatory mishaps.) Here, Assistant Treasury Secretary Michael Barr and Motley Fool editor Ilan Moscovitz discuss the future of finance and the economy.

Ilan Moscovitz: My favorite assessment that I have heard of the act is that it is "a big first step." What do you see as the next critical steps?

Michael Barr: Well, I think if you look at the course of financial reform over history, I think it would be pretty hard to argue that this isn't a major, major set of reforms. I think we have been very upfront that it couldn't do everything. We need to next tackle the basic problems and the structure in the housing finance system, and as part of that to address Fannie Mae and Freddie Mac, the importance of developing a new financial system in the future that is not so much focused on a "heads we win, tails you lose" kind of approach to housing finance.

Moscovitz: What sort of capital requirements would you guys like to see come out of the international negotiations at Basel, and do you think we will get something tougher from there than what we have already in the American legislation? [Editor's note: the financial reform act includes a maximum 15:1 leverage ratio for banks that are a "grave threat" to the financial system, keeps bank holding companies such as Citigroup (NYSE: C), Bank of America (NYSE: BAC), and JPMorgan (NYSE: JPM) to at least the same capital standards as their FDIC-backed depository subsidiaries, and gives a council of regulators the authority to impose more stringent requirements.]

Barr: We have made this really a top priority for the last 18 months, to push both domestically to get a unified position and then internationally to get a unified position on higher capital, on better quality capitals, focused on common equity rather than other components of capital, on less pro-cyclical capital, on bigger buffers overall on the system, and particularly for the largest firms, as well as new rules on liquidity in the system. We are making, I think, terrific progress on that internationally. I think we are going to get a good, strong agreement on that.

The rules going forward will be certainly more robust than we had up to this point in the United States or that are required in the legislation. They are going to be, I think, strong and quite effective new set of capital requirements.

Moscovitz: Is there a number for an unweighted leverage ratio that you think would be appropriate?

Barr: There will be. We have been pushing internationally, and I think we are going to succeed in having an international leverage ratio for the first time, and in the United States we have had a leverage ratio for banks and not one for investment banks or other firms; that is all going to change with our approach now. It doesn't matter whether you are an investment bank or a commercial bank, you can have a strong leverage ratio, and that leverage ratio is going to be applied internationally. [Editor's note: During the run-up to the crisis, foreign banks including UBS (NYSE: UBS) and Deutsche Bank (NYSE: DB), as well as the big five American investment banks -- Bear Stearns, Merrill Lynch, Morgan Stanley (NYSE: MS), Lehman Brothers, and Goldman Sachs (NYSE: GS) -- had been allowed to employ huge amounts of leverage.]

It doesn't really make sense to talk about the number that is appropriate independent of what is the numerator and the denominator in that ratio, and what we are trying to do in the Basel process is toughen up the rules for what is includable in capital and toughen up the rules for measuring the riskiness of assets. So both of those are going to be much, much more conservative in the future. We will have to calibrate what the right ratio is once we see what the results of the tougher approach to capital and asset measurements are.

Moscovitz: The financial crisis was responsible for at least a 40% spike in national debt to GDP. Besides the president's proposed levy to help repay TARP, are there any thoughts about possibly a financial transactions tax targeted at some of the high risk-taking strategies of questionable social value in order to recoup some of those costs and help to make the system safer at the same time?

Barr: Well, the president's financial fee is designed to do both of those things. It is designed to fully recoup any losses that the taxpayers have undertaken under the TARP program, and it is designed to help internalize the risk of financial institutions. It is a fee that is based on the riskiness of the funding of financial institutions and that grows with their size, so it is precisely designed to do both those things.

Moscovitz: Are there any plans, beyond the TARP fee, to recover losses on the indirect fallout of the crisis?

Barr: The focus is really on recouping the taxpayer funds, and obviously as we rebuild our economy from this great recession, we are trying to grow the economy, we are trying to build buffers through capital and the other prudential restrictions in the financial system I mentioned that make it less likely the financial sector can cause such harm again in the future.

Moscovitz: Had the administration and Federal Reserve not taken drastic action to stave off the recession, we'd obviously be in a much worse position than we are today. There's that Blinder/Zandi paper estimating that you guys saved 8.5 million jobs, but the problem is still very huge. Despite these measures, unemployment is expected to remain pretty high for years. And that obviously doesn't include the full measure of underemployment. What would it take to really substantially reduce unemployment from here?

Barr: I think that the president has been quite focused on the next steps, and in the jobs bill, making sure the jobs bill gets done and on using the lever of small-business growth to create more jobs has always been the engine of job growth in the United States.

We have been trying now for many months to get the Republicans to agree to what is a widely acknowledged, good piece of legislation to promote small-business growth in our country that has the support of the Chamber of Commerce, the National Federation of Independent Businesses, the independent bankers, and the Obama administration. We are just looking to get a couple of Republicans to agree to let us come to a vote, and then I am sure we will get it done.

Moscovitz: And do you think that that particular measure will be sufficient, or do you think it is going to take even more?

Barr: Fundamentally, this is a question of getting the private sector to have faith in Americans again, for the financial institutions to step up to the plate with lending for businesses that have cash on hand to make the investments necessary to rebuild their businesses, and for Americans to regain confidence in the future. That is going to take some time to do.

Moscovitz: Thanks very much, Michael.

Barr: Thank you.

Motley Fool editor Ilan Moscovitz doesn't own shares of any company mentioned. The Fool has a disclosure policy.