At the Wall Street Journal/CFO Network Conference in Washington, D.C., Rebecca Blumenstein of the Wall Street Journal moderated a panel discussion of the state of the banking industry. Participants in the panel were former FDIC Chairman Sheila Bair, legendary banking lawyer Rodgin Cohen of Sullivan and Cromwell and Tim Pawlenty, the former Minnesota governor who was just installed as head of the Financial Services Roundtable, a leading industry lobby.

This article will present highlights of the remarks of the principals, followed by some concluding comments from the perspective of one who does not share the industry view.

Perhaps the most interesting participant was Cohen. Although not as well-known as Bair, Cohen is the Barry Manilow of banking law — he writes the laws, he writes the laws. I once spotted Cohen emerging from the inner sanctum of the House Banking Committee after having written some law. Therefore, a couple of his observations are very instructive.

In response to a question about how well-prepared the financial system is for another crisis, Cohen said it's a matter of "probably not if, but when" there will be one. Items he listed as remaining to be done are firm international agreements, clarifying issues related to the orderly liquidation fund and figuring out how the "single point of entry" mechanism for dealing with the collapse of a major financial institution would work.

He concluded, "We need a regulatory regime behind that." If the reader ponders these words for a minute, a lot of components are still missing after legislators and regulators have been working on this stuff, or pretending to, for decades.

Later Cohen called the Dodd-Frank Act "poorly drafted." The subliminal message is that not enough of it was drafted by him, and he would have tightened up some of the language, presumably resolving the ambiguities he complains about mostly for the benefit of his clients.

Bair spoke as chairman of a group called the Systemic Risk Council. Despite its official-sounding name, it is a private group of experts that is trying to lead the debate over the need for stronger capital standards to be put in place before the next episode of the financial crisis occurs.

She identified this as the most pressing need, and she noted that the changes in the Basel capital standards have not yet been implemented. Her group is proposing an 8 percent standard, with a stricter definition of what would qualify, and she stated flatly, "There's still far too much leverage." She added interest-rate risk as a significant concern, with a "rocky road" ahead,

Cohen recalled that this risk has been a factor in past crises, and Bair called capital the first line of defense and said banks need to have cushions of capital to stay solvent during a crisis, but she candidly warned, "We're not there yet."

Pawlenty had been mentioned as a possible candidate for vice president in 2012, and when former Rep. Virgil Goode, R-Va., launched a brief independent bid, it appeared that the time might have come for a dream ticket of Goode and Pawlenty, but the moment passed. The financial services industry has invested a lot in Pawlenty as its spokesman. It was evident that he is still learning his lines. For example, he referred to "systematic" risk, when he probably meant "systemic."

When Bair cited industry opposition as the reason for slow movement in implementing Dodd-Frank and Basel reforms, Pawlenty's group was an obvious target, and the viewer could see that his message is to maintain a slow pace.

Both Bair and Cohen lamented that there was a time when the industry would cooperate more with regulators to implement needed regulations. At this point Cohen made his point about the poor drafting of Dodd-Frank, and he added that the agencies have lacked the resources to implement Dodd-Frank as intended.

Bair admonished the industry that it should face the fact that it is not going to like all the rules and should not like all the rules. She insisted that at the end of the day, the regulators have a public interest mandate to fulfill, and she complained that the industry is still fighting the rules.

While Pawlenty looked awkward at times and probably always will, he recovered somewhat near the end of the discussion when after repeating the longstanding banking industry complaint about the market share gains by non-bank lenders, he acknowledged that in the future, the banking industry may face more serious competition from digital products sponsored by companies like Google and Wal-Mart.

Bair took the opportunity to remind Pawlenty that banks have to be subjected to more regulation than non-banks do because they benefit from the federal safety net of deposit insurance and the Fed discount window and because of their role in running the payment system.

The moderator marked the fact that it is nearly five years since the 2008 episode. From a longer-term, big-picture standpoint, I attempted vainly a third of a century ago to warn the Reagan transition of the threat posed by Citigroup, Chase, Bank of American, Fannie Mae and Freddie Mac. In the meantime the combined size of the first three has to grow, and the housing finance industry is working to re-establish the housing government-sponsored enterprises.

Two of the panelists were forthright in saying that another crisis could occur at any time; I think the authorities are still trying to manage hidden losses from the last one and have said all along that Dodd-Frank will never be implemented.

Congress either intentionally or inadvertently assumed that the industry would be willing to give something back to the nation in return for the generous bailout it has received, but Congress underestimated the determination and ability of the industry to recast itself from villain to victim and to spend liberally to contribute to current politicians and hire former ones like Pawlenty to neutralize and nullify Dodd-Frank as it has done with every previous landmark bill that was supposed to make sure a disruptive banking crisis would "never happen again."