Brown-Vitter emphases a preference for common equity rather than preferred or trust preferred equity, most of which has already been excluded from regulatory capital under Dodd-Frank. More importantly, the simplified approach under Brown-Vitter means the denominator of the capital ratio will no longer be risk-weighted.
Under Basel III, cash has a zero risk-weighting, so it is not added to risk-weighted assets and it doesn't increase a bank's capital requirement. Direct obligations of the U.S. government have a 20% risk-weighting. Mortgage-backed securities with AAA or AA ratings have a 20% rating. A-rated MBS have a 50% risk-weighting, while BBB paper has a 100% risk-weighting, and BB paper has a 200% risk-weighting under Basel III, because of the higher likelihood of default.
Brown-Vitter would treat cash and the lowest quality junk bonds, or even nonperforming loans, as having the same amount of risk. This is counterintuitive, since it could only lead to banks taking more risk, since there would be no capital penalty for doing so.
So rather than taking a direct approach to breaking up the largest U.S. banks, Brown-Vitter seeks an indirect approach of raising the capital requirement so high that the banks and their investors would eventually throw in the towel, after realizing their returns on equity would be too small to justify their size. If only those simplified capital requirements weren't so dangerous.