(Please just read the article and answer the questoin don't give me anything from investopedia)

Looking at the below article, answer the following:

What flaws in Basel I did Basel II attempt to remedy and what provisions did it make for doing so? What short-comings in bank capital regulation remain?

The Rise of Basel II Soon, a variety of inherent flaws in Basel Is treatment of capital became apparent. First, the relationship between assets actual revealed default risk and their risk weights proved to be less reliable than had been thought. For instance, all bonds issued by countries that were members of the Organization for Economic Cooperation and Development (OECD) were given the same weight even though doing so might have downplayed the very real differences in the risk of defaults among these countries or, conversely, possibly overstated the difference in default risks between OECD and non-OECD countries. Second, the Basel methodology was too crude. It simply summed the risk weights to construct a measure of overall capital risk, but that is a poor proxy for actual risk. Doing so does not take into account the overall portfolio risk of the bank and the formula made no room for management strategies that could reduce that overall risk. Abank portfolio can indeed be more or less risky than the mere sum of its parts might indicate because of the correlation among assets. Third, the broad categories were lumped together, and assigned a single weight to a variety of assets that in reality exist along a spectrum of risk profiles. A loan to a startup company, for instance, was treated the same as one to an established Fortune 500 company. As such, banks investing the same share of their portfolio in either asset would have identical mandatory capital set aside. This creates an incentive for a bank to invest in high-yielding assets in the risky end of the spectrum without having to make a corresponding expansion of their capital cushion. This sort of activity could over time increase the overall risk of a banks portfolio although it would still meet Basel I standards. In January of 2001, a second set of Basel standards called Basel II attempted to remedy these problems. (The implementation by the Federal Reserve began in the fall of 2006.) The first big change altered the risk weight. By using the ratings issued by credit rating agencies like Standard and Poors and Moodys to determine the potential risk of default, Basel II set up a system by which assets within each broad risk bucket could be further classified. The second big change was a new method by which risk profiles could be measured. Instead of forcing all banks to abide by the specific numeric standards set forth in Basel II, certain banks could opt out. In place of the top-down approach, the internal ratings based approach available only to sophisticated banks with the resources and knowledge base to develop an internal rating with a mathematic model allowed some banks to estimate the necessary size of their own capital cushion. Both changes were aimed at answering the critics who stated that the original Basel standards did not integrate any market-based mechanisms for evaluating risk. Yet these changes seem to have proven flawed as well. The grades awarded by the ratings agencies for some mortgage-backed securities, for instance, have been shown to be less reliable than originally hoped. Some argue its hard to make a case that a handful of firms which are largely insulated from competition by the Securities and Exchange Commission, as the Big Three ratings agencies are, could be considered a sufficient market-based mechanism. (For a detailed analysis, see this issues cover story on page 14.) In addition, allowing banks to set their own capital requirements doesnt seem to acknowledge the current state of the science of risk management. It has become apparent that the models of risk used by many banks may not have been sufficiently robust to anticipate the potential default of complex new asset-backed securities. There has been some discussion within the Federal Reserve about how to overcome the incentive a bank would have to lowball their capital requirement estimates. One way to create an incentive for banks to be as honest as possible is to require them to precommit to a maximum loss exposure and corresponding capital buffer. If the banks losses exceed the declared maximum, the bank supervisor would levy a fine on the bank. A criticism of the precommitment approach centers on the ability and willingness of a regulator to assess fines. For the fines to be a credible threat, they must be large enough to spur action by the bank. But if an economic shock were to reduce a banks soundness, a regulator might feel compelled, if he believed the shock to be temporary, to avoid assessing the fine if doing so would result in the banks failure. Yet the failure to issue a penalty, especially if it is sufficiently steep for the precommitment regime to work, would severely restrict the credibility of the regulatory threat in the future.