Heat the olive oil in a saucepan on medium-high heat. Once hot, add the bell pepper and sauce for 2 minutes, then add the onions and saute for 3 more minutes, or until the onion is translucent and slightly soft, and bell pepper is just soft. Add the garlic and serrano pepper and saute for 3 more minutes, or until garlic is aromatic.
Add the ground beef to the pot, break it up and brown for 10 minutes, or until meat is cooked through. Season the beef with cumin, chili powder, salt, pepper, oregano, and cayenne pepper. Mix the seasonings in, then add the black and kidney beans, diced tomatoes, tomato sauce, tomato paste, brown sugar, and water. Stir to combine, then top the chili with the bay leaves.
Cover, reduce heat to medium-low, and simmer for 40 minutes. Stir often to ensure no sticking or burning. Adjust seasonings if necessary throughout the simmering process.
Serve over rice, by itself, or with your toppings of choice.