BUENOS AIRES, Argentina -- Roberto Lavagna is well-versed in how a country goes from being the darling of international investors to seeing its banks shuttered and riots in the streets. Lavagna, 67, served as economic minister of Argentina from 2002 to 2005, and is widely credited with helping the county's economy recover from the brink of disaster. Shortly after resigning from office, he ran for president of Argentina in 2007, finishing third with 17% of the vote. He would not discuss whether he plans to run again in 2011, but with Argentina's current president, Cristina Fernandez de Kirchner, deeply unpopular, her political opponents clearly see an opportunity. Lavagna is now Director General of Consejo Una, a think tank. He recently published a book called "The Argentina We Deserve." In a recent interview with TheStreet.com in his modest offices near the Supreme Court building in downtown Buenos Aires, Lavagna says the U.S. can take at least one important lesson from Argentina's recovery, which is to draw a firm line in the sand in its dealings with banks.
When Argentina's banks ran out of funds to pay depositors, Lavagna told the banks, many of which were foreign-owned institutions like Citigroup ( C) HSBC ( symbol) and Banco Santander ( STD), that their parent companies would have to come up with the money on their own. That stance went against the recommendations made to Argentina by the International Monetary Fund, which said Argentina should bail out its banks either by guaranteeing deposits or by inflating its currency so the banks' obligations to its depositors would be easier to meet, Lavagna says.