PCA

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.