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| Maizel: Latin America could benefit from Obama’s proposals |
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Maizel who manages over $5 billion in investments says these proposals put U.S. banks at a “disadvantage” among major international banks. He gives his outlook for the U.S. equity market and talks about his investment strategy. Maizel sees opportunities in Latin American countries such as Brazil and Chile. To listen to the interview, scroll down. -MDUSA: What is your take on Obama’s proposals? -LM: His timing in my opinion seems kind of strange. We are coming out from a major financial crisis. The bankers are under heavy attack and when they are trying to reestablish their positions and hopefully restore some credibility to the system, they are very strongly attacked by the administration. I feel that the timing is somewhat related to what just happened in Massachusetts. The Democratic Party lost its ability to overcome any filibuster and they are trying to play the blame on the situation of the financial system of all the major banks. I didn’t like it and the markets didn’t like it either, there was major drop on the stock indices. -MDUSA: Obama called for limiting the size and trading activities of banks. Do you think this is a good idea? -LM: The rest of the world is looking at consolidation not limiting size. The problem is “too big to fail and that is the worry the government has. The government is very concerned that the banks are growing so much that they are becoming such a liability if they fail to the whole system that it becomes unmanageable. There are other ways to control risk, but risk control by curtailing size is not the answer that I think is in the best interest of the United States as a competitive nation or the banks as institutions. -MDUSA: Can these proposals and overall the financial reform put at risk the entire economic system? -LM: I don’t think it puts it at risks. It limits dramatically the ability of banks to conduct business. When you stop them from doing any proprietary trading which is one of the proposals, first you tell them to grow and then you tell them to do anything. I don’t think it is putting the system at risk. I think it is limiting dramatically its ability to grow and its ability to generate profits, and with no profits there will no repayment of all debt and there will be a lot of things that will not be done because that is the lifeline that they require to stay in business. -MDUSA: Can this be the end of big banks? -LM: It is an exaggeration. Banks have to make money someway, have shareholders money. They make money when they leverage the deposits and leverage the money they have from investors. If they won’t be allowed to do trading, they will make it by charging more and bumping up the fees [to consumers] and by doing that, at the end someone will have to pay. Banks are not going to disappear; they are going to be at a disadvantage against Credit Suisse, UBS, HSBC and Deutsche Bank. They [U.S. banks] are going to find ways of competing and surviving. -MDUSA: Which banks are at a higher risk if this proposal becomes law? -LM: The one that is really worrisome is Citibank if this new law passes. I would have said yes [be passed] before the election in Massachusetts. I think that a control on the banking system makes sense. I think that the profit motivation was so big and they did some pretty foolish things before, but to do it by curtailing their activity to conduct business is not the solution. -MDUSA: You invest in other regions of the world. Can Latin America become a much more attractive region to invest, rather than being here in the United States.? -LM: It will be a more interesting place [to be]. The less regulated the places are, the more money they will attract. You are going to see money flowing to foreign markets. If the U.S. banks are not allowed to play in any of the other markets either, they are going to see less demand for stocks and less volume in the global market. 
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