Xavier Serbia

-MDUSA: What kind of impact do you think the creation of an Agency for Consumer Protection has in the personal economy? Was it necessary?

-XS: The idea behind the new agency is that there are laws, but they are not enforced. The Federal Reserve has laws, the SEC has laws, the FTC has laws, but none of them are enforced. Consequently, this caused the economic crisis. The solution? Centralizing power. But is centralizing power the solution to the problem? I have my doubts: How can you remain independent of political influence? Wouldn’t it be better to create a coordination council between different types of regulatory agencies that would be less costly and less bureaucratical? What if over-regulation, much micromanagement and so much concentration of power in Washington increases costs and limits access to credit? Doesn’t poor behavior encorage consumers to create the perception that the government is protecting their economy? Why exclude certain practices and professions of the central power, such as car dealerships that finance cars? What about the cost and effectiveness? Consumer protection is important ... Does that have to improve? Yes ... But knowing that the effect of any governmental change of this magnitude is uncertain, and without seeing, so far, evidence or valid arguments to help me conclude that the creation of an agency is the solution and not the source of other problems, I have my doubts about the creation of the agency.

-MDUSA: Do you think that the consumers of financial products of this country have learned the lesson?

-XS: Sometimes I think yes and other times no. The level of unemployment, the consequences of excessive leverage and poor investment decisions, have made many families realize that living in debt and making poor investments is harmful to the economic health. What is worrying, at least in my case, is that as a country, the excessive debt can give us a false sense of security.  "The other will pay" That mentality can lead us to believe that “VISA Government bailouts” will be there for economic survival (print more money, to lower the interest to virtually zero, to give you more safety, more coverage, etc.).. In other words, borrow, and do not save, because the government will cover everything. Spend.

Unlike the generation before us, who lived through the Great Depression and learned the importance of being careful with investments, to be frugal at the individual level with the resources we have, and think about the future, have our generation learned that yet? That is the question.

-MDUSA: If you could make any suggestions to this reform, what would you say? What do you think is being left behind?

-XS: Focus on financial education and encourage individual responsibility.  

Derivatives = if there is clearinghouse without access to money from the Federal Reserve. The clearinghouse will have to generate its own funds without the help of the government money.

Create not an agency, but an intergovernmental council between the entities that regulate consumer laws. Advocate for greater transparency from the Fed but maintaining their independence.

-MDUSA: In your opinion, how is the financial reform law being presented? Will it be good for markets or counterproductive? Please explain the highlighted aspects in each case.

We would have to wait to see what is going to be the result of the reconciliation of both projects.

In general, any regulation that does not hinder trade, but facilitates it, allows us to have more options, encourage innovation, economic growth and make it more transparent, is good. What is counterproductive for all is when the government wants to address economic issues.

If Congress is allowed to interfere in the monetary policy of the country, affecting the autonomy of the Reserve; if the government applies favoritism between who is "too big to fail" and who is not; if the government, and not the courts or the creditors and owners, decides which company should go bankrupt and which should not; if the government opens the Federal Reserve ultimately to support the "clearinghouse" of derivatives; and centralizes the consumer protection indicating what should or should not be produced; I hope not to be wrong, but I see it as more counterproductive than helpful.

-MDUSA:The United States have been characterized by a culture of free markets, do you believe that the reform will prevent economic cycles?

No ... and they should not attempt to do so. The government should not try to forecast future economic cycles because the cure may be worse than the disease. If they cannot control an oil pipe in a plant, how will they be able to control economic affairs to avoid future cycles? What the government can do is not cooperate with the wrecking of the economy, bringing distortions to the system such as over-regulation, centralization or encouraging over-consumption behavior through subsidies to businesses and individuals.

 Sometimes doing nothing and doing too much are equaly dangerous.

-MDUSA:  What do you think of the media and the way they cover these issues?

-XS: At the Hispanic level, in general, we were innocent, immature and very “commercial” in the coverage of economic and financial issues. We certainly did not have a prepared journalistic staff – we still have a long way to go – to take serious coverage of issues affecting the consumer's pocket. However, we put many vendors to provide information, allowed for “infomercials” that were presented as reports, people selling financial products such as journalists and reporters that made money by selling houses. There was confusion between public relations agencies and resources into providing the information, analysis and commentaries.

*Translation by Paola Rebellon and Christiane Sonoki