Tuesday morning, with much more fanfare than it deserves, the Federal Reserve approved a final rule that is supposed to strengthen the quantity and quality of bank capital, something the Fed and the other so-called banking regulators always say they are doing better than ever before but never manage to accomplish.

The new regulation is supposed to implement reforms called for by Basel III and the Dodd-Frank Act by establishing "an integrated regulatory framework that addresses shortcomings in capital requirements, particularly for large, internationally active banking organizations, that became apparent during the recent financial crisis."

Fed Chairman Ben Bernanke said, "With these revisions to our capital rules, banking organizations will be better able to withstand periods of financial stress, thus contributing to the overall health of the U.S. economy."

The new rule, which takes effect in January for the largest banks, calls for modestly higher capital requirements based on risk-weighted assets, so it's questionable how much this means, because risk weightings have been politicized and based on spectacularly faulty risk models.

So the focus should turn to the leverage ratio, which applies a simple standard without regard to risk weighting, and that is pitifully low at 4 percent. However, there's a new "supplementary leverage ratio" for the "too big to fail" institutions that is supposed to take off-balance-sheet items into account. It looks like this is a cosmetic solution compared with the proposals already circulating in Congress to require 15 percent capital, without risk weights, counting the off-balance-sheet items.

The Fed spent an undue amount of time fussing over how to make sure that community banks are exempt from these rules but also allowed to continue to count dodgy assets toward their "regulatory capital" requirements. The grounds for this are that community banks would experience greater volatility in capital and funding needs and that they don't have access to the capital markets. Right. However, in fairness, the greatest attention should go to the largest, worst-run banks that have the opportunity to destroy what's left of the financial system.

Finally, Fed Governor Dan Tarullo, who is the point person on the Board for Basel regulations, listed four rulemakings still in the works that are supposed to address the issues raised by the continued vulnerability of the eight largest too big to fail banks.

1. Higher leverage ratio. This rule should close the gap between the Basel ratio and the much higher levels being discussed on the Hill. It needs to do that.

2. Orderly resolution. Another regulation would set levels of capital and debt for this purpose. This whole idea is controversial given that the biggest banks are still too big to fail.

3. Capital surcharges. These would apply to the largest banks pending action by Basel.

4. Wholesale funding. The Fed plans to give notice of a forthcoming notice as to how the too big to fail banks should deal with short-term funding issues and set a level of additional capital they could be required to hold. This could be the most important regulation of all.