Banking Capital Requirements vs Broker-Dealers'

Paul Krugman offers this today:
"The rescue of Bear Stearns, in particular, was a paradigm-changing event.

Traditional, deposit-taking banks have been regulated since the 1930s, because the experience of the Great Depression showed how bank failures can threaten the whole economy. Supposedly, however, “non-depository” institutions like Bear didn’t have to be regulated, because “market discipline” would ensure that they were run responsibly. "

In 2004, the SEC offered dealers the option of going to Basel (bank) capital requirements, which they anticipated would result in a REDUCTION of required capital from the standard SEC rule that applied to all dealers. Several major dealers adopted this including Bear Stearns, Merrill Lynch, Goldman Sachs and Morgan Stanley.

No doubt Dr Krugman will say that the Fed has a sharp eye on all those banks and that's the difference. But you wouldn't know from his remarks that the standing broker-dealer capital requirements were stricter than those for banks. Is there any other formal part of regulation? As we, know dealers are marking to market a larger share of their assets so they are less likely to be fudging capital than banks are.