Safety and soundness concerns in FDIC Payday Lending Guidance clearly mention that there should be adequate capital as Minimum capital requirements are not enough to offset the risks of payday loans. Banks should hold capital against its subprime portfolio in amounts:
Safety and soundness concerns in FDIC Payday Lending Guidance specify that banks should hold capital against their subprime portfolio in amounts that are 1½ to 3 times greater than normal. This is because minimum capital requirements are not sufficient to offset the risks associated with payday loans, which carry a high risk of loss.
Greater the previous
This reflects the FDIC's guidance that the inherent risks associated with payday lending require banks to hold more capital than the minimum requirements, specifically in the range of 1½ to 3 times greater than what would be considered normal for less risky lending activities. This additional capital is meant to provide a buffer against the high risk of loss inherent in payday lending.