The financial sector is still at risk—at least according to a panel of financial services heavyweights who spoke at Fortune’s Most Powerful Women Summit on Wednesday. Former FDIC chairman Sheila Bair, Barclays vice chairman Barbara Byrne and former president of Merrill Lynch Wealth Management Sallie Krawcheck, speaking with Fortune’s Carol Loomis, shared what they saw as the risks the sector is still exposed to—and offered suggestions for fixing what all three see as a still-broken system.

Loomis, who reminded the audience that four years ago she was moderating a similar session at the very moment the TARP bailout was passed in Congress, framed the session by asking each panelist to rate the U.S. financial sector on a scale of 1 to 10 on its ability to weather the kind of crisis we’ve been through.

The women were not optimistic. Bair, who is a Fortune columnist and a senior advisor to the Pew Charitable Trusts, gave the sector a “three or a four, unfortunately,” noting that while it’s been improved, risks remain, and the actual rules haven’t been changed yet. (Bair’s new book about the financial crisis makes clear what she thinks of many of the players from those dark days; see an excerpt here).

The risks posed now, Bair told the crowd, are worse: the Federal Reserve will have to exit its quantitative easing program at some point, she said, which will bring an end to the current low interest rate environment. “That worries me a lot,” she says. The U.S. government’s inability to get its fiscal house in order or simply to make decisions of any kind, she said, is also potentially destabilizing. And near term, she said, the crisis working its way through Europe poses a risk to the global financial system.

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Byrne was slightly more optimistic, rating the sector “maybe not a three, but a four to five.” She said the industry needed to have “guardrails” put in place to provide a structure within which to operate and take risk. “The rule-making is slow,” she said. Byrne also said she saw significant risk in investors’ fleeing equity markets and pouring into debt markets without understanding their complexities. “Someone will wake up one morning and realize they’ve lost 20% of their funds and won’t understand why,” she said.

Krawcheck didn’t put a specific rating on the sector, saying it hasn’t been tested yet. “We won’t know until we know,” she said. She ticked through “significant vulnerabilities,” most notably the $2.6 trillion money fund industry, where individual investors put their money into money funds thinking it’s risk free and guaranteed, but it’s neither. “Individual investors, no capital requirements, and no guarantee—what can go wrong?” she said drily.

Krawcheck also said the banking industry’s compensation structure was still seriously flawed, pointing out that executives are now paid more in stock which only encourages more risk-taking. She suggested shifting more compensation to debt, which, she suggested, would do the opposite and discourage risk. “If you buy a bond the most you get back no matter how much risk is taken is 100% on the dollar,” she said. “That actually sounds pretty good.”

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Krawcheck also said the industry was in need of diversity. “We went into the downturn with the industry white, middle-aged and male,” she said. “And we came out of the downturn whiter, middle ageder, and more male.” Research shows that more diversity reduces risk taking, she said.

Byrne, who counts as clients some of the largest U.S. corporations, ended the session on a positive note, pointing out that corporations are holding lots of cash. Some, she said, are even starting to reinvest in building their businesses, adding manufacturing facilities and thinking more about strategic acquisitions that make sense. “People are starting to put their feet back in,” albeit tentatively, she said.

Byrne said she had one word for what would help the financial system: transparency. “It’s just like your mother always told you,” she said. “A little sunshine always cleans everything up.”

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