When Mary Schapiro stepped into her job as chairman of the Securities and Exchange Commission in January 2009 she knew she would have a tough road ahead given the extent of the global financial crisis.

But she could not have expected the “flash crash” in May that caused the Dow Jones Industrial Average to tumble almost 700 points in a few minutes before rebounding.

Last week, Schapiro announced a plan to put “single stock circuit breakers” in place that would pause trading for five minutes in any Standard & Poor’s 500 share if it falls more than 10% over a five minute period.

Yet by Monday evening, any stress Schapiro had felt on May 6 had disappeared. She looked calm as she spoke with CNBC’s Maria Bartiromo at an event at New York Law School sponsored by the Financial Women’s Association, although she admitted to losing sleep those first few nights after the flash crash.

She has a lot on her mind. The financial reform bill, which will determine the direction the SEC will go, is in the process of being hammered out by Congress. But everyone seems to agree that the regulatory landscape will be stricter than ever before.

“There’s a new sheriff in town,” said Bartiromo several times throughout the evening as she spoke about the aggressiveness that is coming out of Washington. Although she applauded Schapiro for her work at the helm of the SEC, at one point she asked how she will ensure that she regulates without over-regulating.

Schapiro answered that while, on the one hand, regulators need to calibrate what they do so the markets can act freely and fairly, they also need to protect the public and bring integrity to the markets.

“Regulators struggle with this all the time,” she explained. “The pendulum had swung too far to one side. Now it will swing the other way. For us, the point is to be thoughtful and deliberative in our process.”

Schapiro admitted the SEC’s job is made more difficult by the fact that it has only 3,700 employees to monitor 35,000 regulated entities. The Federal Reserve, she said, has one person for each institution it oversees. “We are only covering the waterfront right now,” she said. “We are in 2010 only getting back to the staffing levels of 2005, which is a frightening concept. At the same time the business world has grown in size and complexity.”

Schapiro said the key is for the SEC to have independent revenues. Although Congress has been generous over the last two years, the agency has no guarantee of a growth trajectory.

Yet, Schapiro is sure the financial services industry will look different in two years than it does today. For one, there will be less incentive for institutions to become very large. There will also be a Consumer Financial Protection Agency, tighter underwriting for mortgages, greater disclosure to investors, and an increase in capital requirements.

As much as the SEC has done, Schapiro admitted, there is still more to do. The agency is continuing to look at 12b-1 fees, point of sale disclosures, dark pools, and proxy advisory service firms.

“At the end of the day I want to make sure the industry is well regulated,” she said. “We want to protect investors in the hopes they will stick their toes back in the market.”