Question
Why does the FDIC apply prompt corrective action or PCA in order to resolve or shut down critically undercapitalized banks, i.e., why should a bank
Why does the FDIC apply "prompt corrective action" or PCA in order to resolve or shut down critically undercapitalized banks, i.e., why should a bank NOT be allowed to continue operating without any constraints when its capital base has dropped to such a low level, e.g., what can go wrong by allowing an insolvent bank or almost insolvent bank to continue to operate? Is the FDIC required to "protect" something else other than just the "safety and soundness" of the banking system? (Hint: this has little to do with preventing bank runs since the FDIC exists in order to prevent bank runs in the first place)
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