We’ve always been puzzled by why the regulatory-capital changes don’t make more buzz. Sure, the rules are often hundreds of pages long and dense is the nicest thing we can say about the Basel Committee’s prose style. Still, as we look at the array of issues on which lobbyists are spending hundreds of millions of dollars, some pale in strategic consequence to the latest round of global capital rules. Old regulatory-capital rules not only set the stage for this crisis, but also defined who won or lost leading up to it. The new round of capital standards will have just as much strategic impact, albeit – we hope – at less cost to the innocent bystander.

In the U.S., there’s a limit to who regulators can bring under the Basel capital standards. That’s why, in the run-up to this crisis, big non-banks had so much leverage in all of their quasi-banking activities. Thus, big banks restructured themselves to ape the non-banks to the greatest degree possible to pump their balance sheets with as much hot air as they could.

For all the tough talk in the Obama Administration, the House and Senate bills do little to rewrite this fundamental reality: under them, big non-banks can stay in financial services that compete head-on with banks and remain largely immune from comparable regulatory capital. This wouldn’t be true for the biggest of the big – they would come under systemic-risk standards that pack a capital punch. But, for everyone else, the coast would remain clear for lots of regulatory-capital arbitrage.

In fact, the coast isn’t just clear, it’s greased. The tougher the Basel rules get – and the latest round is very, very tough – the larger the incentive to skedaddle around them. Recognizing this threat, the initial Administration plan sought to choke off big non-banks by limiting the degree to which insured depositories could fund them. This, we think, will help a bit to level ye-olde playing field between banks and non-banks – hedge funds,  asset managers, private-equity firms and the like. But, it won’t do much and it surely won’t get at the heart of the problem.

In fact, both the bill as passed by the House and the Senate discussion draft from Sen. Dodd make it easier for non-banks to continue to have their capital cake and eat the bank’s at the same time. The new “intermediate” holding company approach in the final bill essentially grandfathers the most potent non-bank banks and points a way out of the bank-holding-company morass for firms like Goldman Sachs. To be sure, it’s premised on compliance with “stricter” standards, but what these are and where they apply remains very much a work in progress.

Outside the U.S., these capital concerns are far less pressing. Regulators in the EU, Japan and other major nations have lots more authority to impose Basel-style rules on all of the financial firms they survey. The problem outside the U.S. wasn’t regulatory-capital arbitrage – that’s been pretty much a U.S. sport. Abroad, the problem was lack of any capital standards on non-financial firms until Basel II kicked in in 2007 and, then, lax implementation of a complex capital standard at the height of the boom. This is the problem Basel now seeks to solve – and boy has it. Unless the proposals change much – and they won’t, we think – U.S. banks could find themselves yet again at profound competitive disadvantage to non-banks.