Payday Lending Reform

By Ash Kalra

The San Jose Inside April 27 article “Manny Diaz Shilling for Loan Sharks” seems to imply that the lobbying efforts of Mr. Diaz have resulted in a decision by the City to delay accepting Silicon Valley Community Foundation’s grant to study the impact and breadth of the payday loan industry in San Jose. This is simply not the case.

Back in December of 2010, I co-authored a memorandum with Councilmember Xavier Campos directing the City to apply for the grant. The memorandum was approved, the City applied for the grant, and Silicon Valley Community Foundation’s informed us that the City had been awarded the grant.

The grant requires that the City provide a detailed timeline of how it will study the feasibility of an ordinance limiting payday lending in San Jose. As most everyone in San Jose is aware, the City is struggling with a staggering deficit and is in the midst of a difficult budget balancing process. Cuts are going to be made in most, if not all of the City’s departments. As a result, it is difficult to accurately project a timeline when, at the moment, it is unclear how much manpower the City will have following the implementation of the 2011-2012 budget. These circumstances have been communicated to Silicon Valley Community Foundation, and the foundation has been very gracious and understanding of the City’s current circumstances.

As for the meetings and visits with Mr. Diaz and other representatives of the payday lending industry, of course I agreed to meet with them when they requested it. I always want to hear all sides of an issue before deciding to take action, and I am certain that my colleagues took the meetings for the same reason. To refuse to hear the opinions of the industry that we intend to study and potentially regulate makes little sense and would not reflect well on the open-mindedness that elected officials should have when making important decisions. As an example, the entire Council took numerous meetings with the medical marijuana industry and their lobbyists before the City decided to limit the number of medical marijuana dispensaries to ten. I think it is safe to say that the medical marijuana industry was less than thrilled with the policy we implemented, despite the many meetings we had with the industry’s representatives before the vote.

Make no mistake—Councilmember Campos and I remain committed to this issue, as does Councilmember Sam Liccardo, who submitted a separate memorandum supporting our efforts to address payday lending. On Wednesday, I, along with Vice-Mayor Nguyen, and Councilmembers Campos and Liccardo, submitted another memorandum requesting that the City Council adopt a resolution in opposition of Assembly Bill 1158, a bill which seeks to increase the allowable limit of payday loans to $500 throughout California.

Once the budget is adopted, we will be able to develop an accurate timeline for the City to conduct its study. The meetings with Mr. Diaz and others only prove that we are willing, as we should be, to hear all opinions regarding the issue of payday lending. Despite the implications of the Metro article, we remain committed to examining and addressing this important issue.


  1. Mr Kalra,
    As a police officer, I admire your character for how you handled your dui. You were a man and admitted your wrongdoing and were completely open and honest. It speaks volumes about you as a person. You could have made phone calls etc, but you obviously decided to handle this as a man. Thank you….

  2. Council Member Kalra:

    I subscribe to the philosophy:

    “When it is NOT necessary to do anything, it is necessary NOT to do anything.”

    Please describe as concisely as possible what the “payday lending” problem is.

    In order for the public to know whether it is worth the time and resources of their city government to develop and impose some sort of “Payday Lending Reform”, we need to know what the problem is that so urgently needs city government attention.

    Then we can go on to consider whether or not it is the city government’s business to solve the “problem” or if there is some other public or private institution, agency, or approach that can address the “problem”.

    Frankly, when confronted with the notion of needed “Payday Lending Reform”, you and the other members of the San Jose City Council are about the last persons on the planet whom I would consider looking to for a solution.

  3. Mr. Kalra,

    I would second the comments of Visualize Liberty above.
    Please use this forum to explain to your constituents why you believe that “Payday Lending Reform” is needed. Also, let us know that you at least have some awareness that unintended, harmful consequences might result from the City meddling in the financial transactions between individuals and private companies.
    It’s not as though any of you Councilpersons were elected on a “Payday Lending Reform” platform. So there’s absolutely no public mandate to act on this. Is there?

  4. More process, which is inevitable in government generally, and in San Jose in particular.

    Despite the fact that there may be an independent funding source for this unnecessary study(which I trust will cover the ENTIRE cost of whatever you do as a body) the time of the mayor and the council needs to be focused on the considerable more important “challenges” (another one of those government/bureaucratic euphemisms) that face this city.

    It is the job of government to undertake only those tasks which individuals and groups cannot do themselves.  This incessant expansion of government in taking on tasks best left to private individuals and private groups is what has left government at every level throughout this country in severe economic straits.

    STOP already!  Give us police and fire protection, infrastructure in good order and regular repair, and drop everything else.  Otherwise, China will soon own this once great nation, lock, stock, and barrel.

  5. Who will enforce this payday lending reform? Are we going to hire librarians and community center staff who have been laid off?

    It would be prudent to focus on the basics a city government should provide.  This is a private business subject.

    It seems that government is always at the quick to jump in and regulate what the private sector is doing.

    I.e., pass a law barring a fast food resturant from providing “happy meals” to encourage better eating habits.  When I frequently go to the grocery store and see large overweight people buying soda, chips, candy, ding dongs and then swipe their food stamp debit card to pay for it all – I have to wonder “WTF?”

  6. Most payday loans are for a few hundred bucks and usually cost around $15-$20 per hundred.

    Do-gooder politicians (and community organizers) annualize an interest rate to create a new “victim” they can save from some evil corporation.  Who cares if the term of the loan may only be a few days.

    This comes as no surprise since politicians mislead like this every day.  As always, the worst part is not the lie, but the consequences of their “reform”.

    What’s the alternative for the person who has to take a payday loan?  Don’t buy food for the baby?  Don’t pay the rent and put your family on the street?  Commit a crime and steal something?  Ask the neighborhood loan shark who accrues blood and bones instead of interest?

    If someone dies because Ash Kalra thought $30 bucks was too much to charge for a 14 day $200 loan, is he an accessory to murder?

  7. Did you post this or did the editors pick this out of somewhere (district newsletter) and post this on your behalf?  If you posted it, kudos for participating publicly in the policy dialogue.  This is much preferred to just working an issue behind the scenes with council memos and quiet words until you line up enough votes.

    In terms of the actual matter, payday loans – yes, they are a predatory nuisance that exploits the poor and foolish.  Didn’t they do something with planning and use permits so we didn’t have liquor stores on every corner in the poor parts of town?  Couldn’t we do the same thing here – limit where they could locate and how many could be in one part of town?

    Beyond that, are they any worse than card rooms, liquor stores or other vice type of establishments?  People do have the freedom to choose, even if its unwise choices.

  8. Ash,
    Like many other city workers I don’t even live in San Jose so it doesn’t bother me at all to see you wasting money and resources on crap like this.
    The only thing that matters to me is that you continue to support us union employees.
    Thanks buddy. Keep up the good work!

    • > Like many other city workers I don’t even live in San Jose so it doesn’t bother me at all to see you wasting money and resources on crap like this.
      The only thing that matters to me is that you continue to support us union employees.

      Oh wow!

      It’s reassuring to know that there are at least SOME honest city employees.

      • Yeah that’s pretty amazing. The irony though is that it’s the cumulative impact of hundreds of instances of precisely this sort of nonsense from starry-eyed councilpersons over the years that has gotten the City into this financial mess.
        Apparently the city employees are too dumb to figure out that it’s guys like Kalra who are really their worst enemies.
        (Not that there are ANY fiscally responsible members in the entire council except maybe PLO but I’m not even sure about him sometimes with this pot dispensary stuff)

  9. Consumers should be aware of their ability to meet payment obligations before taking out a loan. There are tools available to consumers to calculate the monthly payment for any loan type. Lenders themselves have different thresholds for accepting customers that have a different debt to income level, meaning the amount of money left over after all monthly outgoings for all loans have been paid. Conventional retail banks have much more conservative policies, while payday lenders have the least restrictions. Used properly, payday loans have a place in today’s world, bridging the gap between pay days – though they should NEVER be rolled over – this is the trap consumers fall into. Check out state laws at there is also a payment calculator you can use.

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