In a farewell speech Wednesday, Comptroller of the Currency John Dugan called on regulators to re-examine the prompt corrective action regime.
Dugan said PCAs proved valuable during better economic times but were far less useful the past three years. Consequently, he said there are reasons to improve the issuance of PCAs.
"Of the 45 national banks that have failed since the beginning of 2008, nearly all had amounts of capital that significantly exceeded the PCA-required 'well-capitalized' level just one year before failure," Dugan said to the Exchequer Club in Washington.
"But the CRE and other loan chargeoffs that sunk these firms did not spike until this last year before the institutions were closed," he continued. "By that time, the regulatory intervention authorized under PCA was too late to avoid failures and losses to the deposit insurance fund."
The 1991 Federal Deposit Insurance Corp. Improvement Act created PCAs as a trigger for higher capital requirements for troubled banks.
Dugan, whose last day as comptroller is Aug. 14, also focused in his speech on the lessons learned during the economic crisis and his tenure.