With the inter-agency leverage proposal, the ignominy of the biggest banks is complete. For all the talk of their vaunted prowess and the “watered-down” rules that do their bidding, I see nothing in the final Basel III rules that meets the biggest banks even half-way, with insult added to injury in the form of the new G-SIB leverage proposal. If big banks want to make a dent in the next round of costly new rules, they’ll need to make it far more clear to skeptical policy-makers that the new rules are bad to someone other than big banks.

How to do this? It’s been done before – see for example significant changes to come in the U. S. version of the Basel III liquidity rules reflecting hard-nosed analytical work. This didn’t argue that banks might not lend as much or fall prey to foreign competitors; instead, it showed that key assumptions in the proposal were factually flawed and had perverse market consequences. And, the tough FRB single-counterparty credit limit proposal is now on indefinite hold because banks proved that it might well accomplish one Fed goal, but only at grave cost to another (central clearing for derivatives). The CFTC concessions on extraterritoriality are also a significant, hard fought win.

Even those who argue that these revised rules are testament more to lobbying than logic have to admit that it’s a scant crop. As required by Dodd-Frank – a law that shows little sign of heavy hitting from big-bank battalions – U.S. regulators are moving ahead with a panoply of standards that will substantively restructure the industry in ways not one single big bank welcomes in anything more than rhetorical fashion. Three years post Dodd-Frank, the rules are slow in coming – perhaps the only “victory” one could attribute to the behemoths – but the full scope of all the structural changes is in view and, with it, shock and awe. If you want to see real lobbying firepower at work, take a look at the biggest insurance companies. They got themselves out of the U.S. Basel III rules and only one big firm, Prudential, is so far sanctioned as systemic. Yes, we know AIG is similarly dignified, but given its role in the financial crisis, that was foregone from day one. Another formidable foe to costly regulation — asset managers — have distinguished themselves not just by staying out of every grasp the FRB would like to lay for them, but also wholly out of potential systemic designation. FSOC was so off put by asset managers that its long-delayed systemic-designation rule doesn’t even apply to this sector. Too hard to think now about them, so said FSOC.

Are the arguments of big insurers and asset managers substantively better than those of big banks? Not a bit – how for example to protest systemic designation of asset managers with $3-plus trillion in their hands when BHCs tipping the scales at $50 billion are being defenestrated? One important reason for the success of the mega non-banks is that they muster counter offers to problematic proposals very, very early in the decision-making process. One major failing I’ve seen over the years is unwillingness of big banks to believe anyone would do anything they don’t like until they read it in a final rule. Perhaps trained in a sales culture still anathema to many bankers, non-bankers have far less trouble hearing footsteps in the under-brush.

So, now what? In the face of the new leverage standard, I doubt complaints about credit availability will do much to quell the opposition. This was the argument marshaled against the Basel III risk-based standards to no avail. The strategy didn’t work then because Congress doesn’t trust big banks to lend even if they promise to do more of it and I doubt it will fare better another time around the Capitol. Similarly, complaints about competition – that is, U.S. banks will be beaten sideways by foreigners – haven’t shown traction. One reason for this is that foreign-bank rules are not exactly an example of prudence. The FRB’s FBO rule is also supposed to settle the score at home and, as far as doing business overseas, most Members of Congress aren’t so sure they want big banks there anyway.

At this point, a lot of tough rules are so far out of the gate that they’ll be hard to stop. Which if any should be stopped is a subject for another day – I think several of the new, costly proposals are long overdue. But, if big banks want to win for a change, the story has to change to one skeptics will, if not believe, at least respect enough to consider with an open mind. From that, a more balanced approach that weighs rules for banks against risks in the shadows could begin.