Less than a week after Congress reached an agreement on a sweeping package of regulatory reforms, StreetWise sat down with Harvey Pitt, former chairman of the Securities and Exchange Commission and now CEO of Kalorama Partners LLC, a Washington-based consulting company, to discuss these new rules of the road and the Wall Street collapse in general. Below are some of the veteran securities lawyer’s thoughts on what went wrong—and what may still go wrong.

StreetWise: What is your general feeling about the reform bill?

Harvey Pitt: I’m unhappy with it. We’ve got 2,500 pages, which ensures that pretty much no one in Congress has actually read it. As one member of Congress said, each one of those pages contains at least three unintended consequences for the financial markets. It has taken us two years to get a bill, and what we got doesn’t give us what we had hoped for: a more nimble system with more tools to deal rapidly with the next crisis, whatever that may be. Instead, the legislation lends itself to being called the lawyers’ full employment act of 2010.

What do you believe the bill should have contained?

What we needed—what we still need—are three very simple elements. First of all, a provision that anyone whose business or dealings have a significant impact on financial markets should be forced to supply significant data on their products and services, their liquidity and leverage, and so on to regulators. We’ve got a problem today in that we regulate people by looking at what they were born as, rather than what they have become over time, and that leaves a lot of regulators without enough knowledge of how the firms they monitor actually can impact the financial markets.

Secondly, we need to impose an obligation on government to analyze all this data and disseminate it so that regulators and those in the markets themselves can factor it into their decisionmaking. Finally, we need to set circuit breakers—something that will give government the ability to stop, look, and listen to what is going on and prevent the trend from continuing and magnifying until we can understand what it is that is really taking place and identify any systemic threats. Together, these would give us some level of comfort that the next crisis will be manageable.

We have yet to hear what the Financial Crisis Inquiry Commission’s recommendations will be. Could they address some of these issues?

We approached the regulatory reform issue backwards. The FCIC won’t issue its report until long after this reform package becomes law. By then, it’s too late. If they get it right, it’s still too late for the conclusions to become a significant part of the reform.

What do you think of the proposed changes to the regulatory bodies themselves? On the one hand, there is a new group of overseers at the top. On the other, the new rules leave existing agencies largely untouched.

The regulatory system as it was set up (or as it evolved piecemeal) failed. It couldn’t spot, address, or stop the crisis. What we need now is functional regulation from a single agency, and instead, the proposed changes will actually politicize formerly independent regulatory agencies. We need a truly independent Fed. Otherwise, it actually makes it easier for a new crisis to gestate. There is the potential for a politicized group of regulators to actually help start a crisis by accommodating the wishes of the politicians, not just fail to stop one from happening.