What is the significance of prompt corrective action as specified by the FDICIA legislation?

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What is the significance of prompt corrective action as specified by the FDICIA legislation?

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The prompt corrective action provision requires regulators to appoint a receiver for the bank when the leverage ratio falls below 2 percent.  Thus even though the bank is technically not insolvent in terms of book value of equity, the institution can be placed into receivorship.

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