Prompt Corrective Action. The FDICIA created the PCA framework. Under the PCA, there are five capital categories (well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized) based on risk-based capital and leverage requirements that signal the strength of the bank and identify financially troubled banks or banks with supervisory issues. The DFA required a study of the PCA framework. Also, the new capital rules (implementing Basel III for US banks) amend the PCA framework.

Featured definitions