For the most part, the implementation of Basel III is a done deal. Yesterday, Treasury Secretary Jacob Lew and the EU’s financial services chief, Michel Barnier, reaffirmed their commitment to the international capital requirements for systemically important financial institutions.

Final implementation is years away, and by that time the Basel committee at the Bank of International Settlements will be working on the latest Basel incarnation, based on everything that goes wrong for big banks between now and then.

As one who covered Basel standards for nearly a decade now, I was shocked by the comments of Thomas Hoenig, vice chairman for the Federal Deposit Insurance Corp. to the International Association of Deposit Insurers 2013 Research Conference underway in Basel, Switzerland.

Straight off the bat, he refers to Basel standards as a "well-intentioned illusion." It was shocking because coverage of Basel is usually favorable, and those in power, such as Lew and Barnier, unequivocally support the measures.

But it was even more shocking because Mr. Hoening is correct: Basel standards, in reality, only help big banks get bigger and buffer these SIFIs from individual failure.

There is no guarantee that stronger Basel standards prevent economic crisis. One could argue the opposite, as Basel requires more capital in times of less liquidity. The bank remains cash-flush and yet the people can not tap the benefits of well-functioning capital markets. The economy begins to suffer more, and banks need to hold even more capital.

As Hoening mentions, this give the "illusion" that a bank is in a better-off state than it is, giving it an unfair advantage to smaller enterprises.

The procyclical argument is one against Basel. Some conspiracy theorists go so far as to blame it not only for the recent global credit crisis, but for the subsequent slow recovery.

This is too far.

Still with bank earnings reports, readers of press coverage wish to be made aware of tier-1 capital holdings now. Banks cheer their levels, especially when ahead of scheduled ratios. And the press takes the bait.

But it remains fallacy to assume Basel regulations do anything BUT help big banks help themselves. It is, after all, the voluntary self-regualtion of banks, as written by bankers.

"The Basel III proposal belatedly introduces the concept of a leverage ratio but calls for it to be only 3%, an amount already shown to be insufficient to absorb sizable financial losses in a crisis," Hoening said. "It is wrong to suggest to the public that, with so little capital, these largest firms could survive without public support should they encounter any significant economic reversals."

Basel is more than an illusion, it is an economic threat to financial services Swiss bankers can not envision. In the United States, mortgage servicing comes to mind as the starkest example – an unknown industry in Europe.

Hoening is calling for a more realistic capital standard. He is calling for a change of direction to the debate.

His comments are logical and practical and invite broader, necessary discussion.

And, if my years of experience with Basel pragmatists is anything to go by, Hoening's comments will largely go ignored.