house shamrock ceremony begin? i'll go to you first, lauren. [laughter] lauren: 1957, for sure. stuart: for sure? all right. susan. susan: i'll take '62. stuart: and i will take '52. the answer is -- well cone, stu, ireland's ambassador to the united states sent a box of shamrocks to president harry truman and created the tradition. quick check of markets. watch out for financial activity this weekend. there could be all kinds of stuff going on as the banks organize themselves for monday. all right, markets are down at this moment. that's it for "varney & company." thanks for watching. "coast to coast" starts now. ♪ ♪ neil: all right. happy music but so much for luck of the irish, no luck, and it really doesn't matter even if you're irish. everyone is getting caught up many a selloff they can't seem to the shake off, and it is not

just the irish who aren't smiling. s tht alarming when you consider the st. patty's day should be celebrating their newfound pot of gold, tens of billions of collars in rescue dough that is draining faster tan a guinness at an irish pub. take a guess who is going to pay for all of that? try you, laddies and lassies. forget about tens of billions of dollars, what if i told you there's trillions of dollars in additional rescue lucky charms many there if banks need it and, yeah, you'll be paying for it? we are all over it. welcome, everybody, i'm neil cavuto. not really but, man, i'm just trying to get you happy because you can see what's happening at the bottom of the screen. we've got you covered because the irish have a saying, may the road rise up to meet you and the wind be always at your back. but here's the problem, this road is scary, can and that wind is hitting investors head on. former fdic chief sheila bair

says batten down the hatches and larry kudlow says prepare for higher interest rates no matter what. two irishmen meeting, not in a bar, that's a bad joke, but at the u.s. capitol. joe biden and kevin mccarthy to the chad pergram on that. chad. >> reporter: neil, good afternoon. president biden and and house speaker kevin mccarthy have not met in person in accept weeks on the debt ceiling. there will not be any movement today, still the debt the ceiling looms large. >> -- to pay your bills is what i, all of your bills when they're due is what i think of as a default. the united stateses has always paid all of its bills on time, and it should stay that way, and that's been a core american value since 1789. >> reporter: the annual friends of ireland lunch at the capitol brings the president and speaker together. it often features leaders who are political opposites.

>> the started with ronald reagan and tip o'neill, two people that had different philosophies that found ability to come together. and if i can end with my father's favorite quote, you know, may the road rise up to meet your feet, may the wind always be at your back. may the sunshine softly upon your face, may rainfall sort concern softly upon your field. until we meet again, may cold hold you in the palm of your hand. >> reporter: but even though there is frivolity at the lunch, relations between the president and mccarthy are are front and center. this is not about the debt ceiling, but in reality it is. the. >> i think can only help the relationship between kevin and the president. this will be a common ground that they have, it'll be a common frame of reference that they can use. so while it may be unrelated to the debt ceiling, at the same time it can bring down a lot of attention and give them a way to get to, hopefully, find some sort of a resolution. >> reporter: irish -- is the

only global leader guaranteed a meeting with the president and the speaker because of the lunch. they'll talk about the peace process for northern ireland. neil? neil: i don't see any green, chad. maybe that just an oversight? [laughter] >> reporter: i wore green on wednesday. i was a couple of days early. neil: you are a work animal. >> reporter: my photographer has green on, michael. he has green on. neil: that's fine. that counts, my friend. thank you very much. have a great one. chad pergram can on that. by the way, we talk about irish things, may you be at the gates of heaven an hour before the devil knows you're dead, which could really be extended to those who trade right now an hour before the market closes or two hours or three hours record -- or in in this case, four hours. douglas holtz-eakin, former omb

director. the irish aren't the only ones who aren't smailing. a lot of investors -- smiling. a lot of investors getting pounded this week with the notion that all those pots of gold for the banks, it's not helping them. what do you make of that? >>st the pretty interesting. when we saw silicon valley bank get into trouble, it didn't seem to me that it meritedded response we saw, this 100% guarantee in the uninsured deposits, setting up a new lending facility where you can get value for bonds that have sunk below that and market value. it seemed out of proportion to the problem. and i think that scares people. i thought it was a mistake to have the president abe the it. that doesn't comfort people, it makes people think, oh, this is a big keel. and so we've now seen first republic and, you know, a horse of a different color, credit suisse, which has had problems for a long, long time. and i think we've just got a lot of uncertainty facing the financial sector, and the average investors doesn't know how to sort it out, and we're seeing it in the markets.

neil: kevin to roarly's talked about why we have so many regional banks in the first place, thousands of them all over the place, and there's -- >> never let one fail, neil. we never let one fail. [laughter] neil: back in the 1980s we let hundreds of s&l fail and go by the wayside. >> yeah. neil: that would be very, very tough love, and they're not all due for that. but he was almost saying we've outgrown the need for this. what do you think? >> i've often thought that people really don't think cheerily about -- clearly about banks and the financial sector. in almost every industry, there are firms of different sizes and different scopes. and so we need banks that have a multi-national scope, that have the scale to close big deals for our largest corporations. and we need some smaller banks as well. but we don't have of this notion that every bank that fails constitutes a national failure. firms go out of business in every industry all the time. and the hallmark of successful

competition is, in fact, having some firms fail. and it seems to me we've gotten away from that in banking and financial services, and that's a problem and that our regulators have to start genuinely trying to let markets work better in these areas because, ultimately, it'll serve the taxpayer better, t serve -- it'll serve the customers better. you really shouldn't have a bank that's not doing due can diligence. we need to get away from the model we're in right now. neil: other banks get caught up in the fray having nothing to do with their business practice practices or how they run their banks or whether they're upside down op on treasury bill and note investment. what if they're just part of that that contagion of a selloff or people who are moving from smaller regional banks to big banks? we're told upwards of $20 billion this week alone to banks like bank of america, jpmorgan chase, wells fargo, maybe much more than that, and they're suffering because of that through nothing that they've done. what do you to do for them, anything?

>> right. there's a very fine line in banking between illiquid and insolvent because fire sale assets can lower the values on your balance sheet and turn you into an insolvent institution very, very quickly. so to prevent that and have only the truly insolvent get closed, we've always had as a piece of central banking being lender of last resort for liquidity purposes. not capital infusions, but making the cash flows balance out. it seems to me that that's a role that the fed has been pulled back too far from. you need a lender of last resort for liquidity purposes. silicon valley bank, their problem was they were genuinely insolvent. they had a terrible balance sheet, and some very smart venture capitalists thought, nope, this isn't going to make it, let's get our money out. and the run started because they were insolvent, a very dangerous situation than a regional bank

that's done nothing wrong. that's when the lender of last resort has to step in. stuart: -- neil: that's the position we're in right now. doug, thank you very much. douglas holtz-eakin. want to go to ray wang and -- gentlemen, markets are selling off of and ending what will be a pretty iffy week on the belief that there are other problem banks out the there, and all the rescue pots of gold in the world aren't saving them or helping them or, certainly, boosting them. what do you make of that? the first to you, larry. >> welcome to the marched madness, banking crisis style. and what's changed, neil, here is this is global, it's systemic, and now it involves a bailout, right? look, not even the luck of the irish can save us on a week like this. i just got off the phone with my mom in south florida, and i will tell you, retirees are fuming mad. they're worried, is their money safe in local and community banks. they're worried that their costs are still rising year-over-year.

finish and now they're mad because they're going to have to bail out other people's bad behavior all over again after the government told us that wasn't going to happen. so it is the unfortunate that we're in this situation. it's destabilizing, it's forcing money from small local community and regional banks where they lend credit to the business community, where they perform a vital role into large banks. exactly the opposite of what the regulators said they were going to do. s the unfortunate. local businesses and small business owners are going to pay the price with difficult credit going forward. this is an unintended consequence of bad policy, regulation backfiring in washington. neil: you know, ray, if smart bankers start looking at this and saying, all right, i'm talking about the guys at jpmorgan chase and others who forked over a lot of money in these funds, you know, to be available to regional banks like republic, etc., and they realize that it does no good or for the time being it appears to do no good, they're not going to be

putting up dough no the matter who's e telling them or begging them to do so. then that cascades z into something bad, doesn't itsome. >> yeah. something earlier, right, trusted institutions are at an all-time low. we have a crisis of confidence in our regulators and in institutions. can and that confluence is what's driving this at the moment. so, for example, you know, a $30 billion back sop from all these banks to help first republic, the first question that you ask is how much money left first republic, was it $20 billion, $30 billion, was it more? and that continues to the feed on this frenzy of i don't trust what people are saying, and that causes more people to make a runs on the banks. the bigger problem is the too big to fail banks aren't doing their job lending because it's not profitable for them. and so we do need banks at different do sizes, and it's so important to have community banks, credit unions to be able to serve those local needs like a bank in the mid know -- mid

knows what they need to do to lend to the farmers. a bank in silicon valley, biotech and high-tech, that's their passion and purpose, and when we get rid of those, we're going to have a big hole and a liquidity crunch. and the fed has this the i'd roj call war. -- ideological war. neil: i guess the issue is do we need thousands of such banks? we just don't know. it's a little early. but, you know, when you look at what's going on, larry, i mean, the one thing that's very clear is people are worried enough to maybe run to the safety and the high quality and the government backing of treasury notes and bonds, interest rates have really collapsed. the 10-year now is around 3.40% last time i checked not that long ago, a little over a week ago, it was over $ -- 4%. you could argue that borrowing costs and the like are coming down. i'm just wondering are people likely to take advantage of that or still hold tight to their

money? because this is for all the economic marbles, if you think about it. >> well, you make a really good point. and the silver lining to this is interest rates are going down, so for people that borrow money, people that have a mortgage, they're going to get a lifeline in termses of lower borrowing costs. the challenge will be accessing those credit markets, those large financial institutions that are beneficiaries of these inflows as it's leaving small regional community banks. the money is leaving first republic even though they got a lifeline and a bailout from the major financial institutions, so those large banks are going to be more selective about who they lend money to. retirees can still the lock in yields, it's fascinating, treasury yields are coming down, but cd rates are going up because banks are so desperate for inflows. so we're telling people your local regional bank isn't guaranteed, but you can lock in a cd within the fdic limits that is shined. that's something we can happening our hat on here. neil: you know, technology stocks you think in a lower rate environment, right, would be doing better than they are, and

they're not. what do you make of that? >> you know, people are flying to high quality companies. these are companies with great balance sheets, companies that are growing 20-30% year other year, and the tech stocks have shown consistently that they can deliver quarter to quarter. and so they're the seen as a flight to safety along with bitcoin which is above 25 the k at this moment. neil: that's wild, you're right. so have metals. gentlemen, thank you very, very much. >> happy st. path wick's -- patrick's day. neil: to you as well. a lot of people are nosing that -- noticing that it is st. patrick's day, one, of course, saying i'm wearing a green tie. please tell me you're not irish. well, i'm half irish and half italian which means part of me wants to take over the world, and the other half feels guilty about it. [laughter] anyway, as we sort of march through these markets, another irish saying i've always loved, may you live as long as you want and never want as long as you

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neil: a live shot of dublin, ireland. a lot of european banking institutions are under enormous pressure, bank of ireland among them, but nothing to the cree that we are here. no rescues going on here, no backstops going on here. that is still weighing on the markets, and customers are feeling it because all of a sudden the incentive to lend to them, to do pretty much anybacking activity these days kind of grinds to the a halt. the president and ceo of the united states hispanic business council nice enough to join us. we don't think of that the, right? if banks slow down or are skittish in this environment, certainly skittish about lending, you're a part of a big customer base that kind of gets frozen in place, right? >> you're absolutely right, neil. and happy st. patrick's day to

you. neil: to you as well. >> you know, at the united states' hispanic business council, we advocate on behalf of the 4.5 million hispanic-owned firms in this country that collectively contribute over $800 ballot the american economy every year concern $800 billion. and as it turns out, hispanics are the fastest growing segment of the american small business community. we're creating new ventures at a rate of 3 to 1 when compared to the general market. that makes us the fastest growing segment of american small business. now, this is important because it's the small businesses, neil, that create the jobs. in fact, more than two-thirds of new jobs are created by the small companies, not the large conglomerates. and right now the failure of svb, of first republic and signature, that makes matters much worse for us. and, you know, as usual, american small business is probably going to take the hit. neil: yeah, that doesn't

surprise me. but, you know, a lot of small businesses, particularly some of the hispanic business leaders that i know are very savvy when it comes to this stuff. and i'm wondering if some of them are saying i love my local bank, my regional bank, my small bank, but i'm getting kind of antsy not only for my own family finances and savings we have there, but for my business, and maybe i should go to a bigger bank. and a lot of people are doing that to the tune of almost $20 billion this past week. what do you tell them? >> you know, i think financing as it relates specifically to the hispanic business community is a very tricky thing. hispanics usually have to turn to their personal finances when it comes to funding their business. in fact, a stanford study found that over 70% of hispanics use their personal finances to run the company compared to to only 6% that get approvals for loans from traditional banks. now, when they do get that

approval, less than a quarter9 of them get approved for a loan over $100,000 compared to more than 50% of the general market counterpart that are applying for that $100,000 loan. so financing has always been tricky and very, very sparse when it comes to the hispanic business community. and, again, the closures of these banks makes things very volatile. it makes it a very risky enterprise, to run an american small business, and you're absolutely right. hispanic businesses are getting very, very nervous about what we're seeing right now. and this run on the market is going to make matters much worse for us. neil: well, i hope you're wrong about that. you've been very prescient on a lot of other developments. hopefully, this crisis shall pass. javier, thank you. have a wonderful weekend. >> thanks for having me, neil. have a great one. god bless. neil: you tattoo. the dow down about 400 points right now. a lot of people are claiming, obviously, two irishmen -- the president of the united states, speaker of the house -- meeting

today and next week we have the fed meeting. very few are irish on the fed panel, but that that doesn't matter, they're all meeting. but the really, really big one is that between the chinese leader and the russian leader, xi jinping and vladimir putin. that is scheduled for next week, and that one, that one the world is watching. not just the irish. if your business kept on employees through the pandemic, getrefunds.com can see if it may qualify for a payroll tax refund of up to $26,000 per employee, even if it received ppp, and all it takes is eight minutes to get started. then we'll work with you to fill out your forms and submit the application; that easy. and if your business doesn't get paid, we don't get paid. getrefunds.com has helped businesses like yours claim over $2 billion but it's only available for a limited time. go to getrefunds.com, powered by innovation refunds.

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we got this. we got this. we got this. yay! we got this. we got this! life is for living. we got this! let's partner for all of it. edward jones ♪ ♪ neil: welcome back. this is fifth avenue in new york city. that's st. patrick's ca three corral. a little footnote, back on september 17, 1949, hi irish mom and italian dad got married in that church. bet you can't know that. there's a plaque there and everything. no, there's no plaque are, but

it happened there. i have great memories of this day and that church and this city. but things have changed, right? a lot has changed. we've got financial crisis going on, and we've got tiktok and the back and forth on that, whether it even survives, whether there are potential buyers out there, whether congress will force that. let's go to grady trimble with more on capitol hill. >> reporter: i do have an irish name, so that works, neil. lawmakers will grill tiktok's ceo next thursday. the night before though a group of tech the executives and members of congress will reportedly meet in private to cuts the national security -- to discuss the national security and other threats related to china. no doubt tiktok will come up at that meeting, and that's because "the wall street journal" reports a former google policy adviser who now advises congress on china, he's one of the organizers. he says tiktok is the most eau potent espionage operation china

has ever carried out against the united states, and everyone knows it. status quo can't continue. tech investor peter thiel will spook to the roughly 200 people there, according to the journal, and these four lawmakers have rsvp'd, the journal says. each of them is pushing legislation to ban tiktok or give president biden the authority to do so. you might have noticed over the past couple of months president biden has taken a tougher stance on tiktok, telling the app that it needs to divest from its chinese parent company or it could be banned. >> when it comes to the safety of americans, when it comes to their privacy, we're going to speak out, and we're going to be very clear about that. we're asking congress to the move forward with this bipartisan legislation, the restrict act, as i just mentioned, and we're going to continue to do so. >> reporter: and all of this comes as tiktok's chinese parent company bitedance is under investigation -- bytedance is under investigation. "forbes" reports the fbi and doj are are looking into why it

spied on u.s. journalists and other americans. tiktok tells us the employees involved are no longer with the company. now, publicly tiktok has said that it doesn't need to be sold in order to keep data from americans out of the hands of the chinese government, but there are reports, neil, that behind the scenes it's actually talking with potential buyers just like it did, deja vu, a few years ago when president trump tried to ban tiktok. neil? neil: yeah, i remember that. grady, thank you very much. all right. speaking of china, xi jinping is going on the meeting with vladimir putin in russia, first time since the invasion of ukraine. ing michael becomely on the significance of that the. michael is the american enterprise institute non-are resident senior fellow, with us right now. michael, what do you think happens at this meeting? >> well, i think russia's going to be looking to get more aid from if the china both on the economic front, buying more russian goods and supplying critical parts for russia, but also, you know, we've heard reports that china's considering

providing lethal aid to russia, and i assume that's going to be discussed as well. there's already reports that china is sending small amounts of assault rifles and body armor as well as parts for aviation equipment and navigation equipment and drones. so we'll see if some kind of sort of understanding comes out of this, but i would expect a that to be front can and center. neil: if china were to do that, of course, china might make a distinction none of these are lethal weapons, i have no idea, but it would obviously be a game-changer and up the ante and the angst in that region of the world. what and how will we respond? >> yeah. i think it's symbolically it would be a game-changer. make no mistake, china has been propping russia up throughout this conflict, but the transition to explicitly lethal aid wouldal this isn't just some limited war in europe, it is a proxy conflict between china and russia, the sort of axis against the united states and its allies. so i think it really would up stakes of the conflict and just

signal that china is willing to run greater risks to an tool tag nice -- antagonize the west in order to prop up its russian ally. neil: we'll watch closely. michael, thank you for that the. we are learning, want to pass this along, that credit suisse teams are going on the talking this weekend on various scenarios for the bank. whether that is central bank members or other member banks going on around the world that have set up this consortium certainly to help out first republic bank, that's a separate thing that the swiss bank has gotten from the bank of switzerland, their central bank. i want to pick the brain of larry kudlow, what he makes of that, as this crisis seems to widen and the response of institutions that have gotten all this ins of billions of collars -- tens of billions of collars in help apparently is falling on deears. larry on that after this. ♪ ♪

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only from fidelity. ♪ or. ♪ muck. neil: the green river in chicago, they do this every year. i remember one year it was iced over, and it was still all green. you could walk across it. or maybe i was just kind of smashed out of my mind. i thought it was frozen, i thought it was green. happy st. patty's day, neverless. not very happy for investors at the corner of wall and broad. to my friend, larry kudlow of "kudlow," great show, great person with a great mind. you know, larry, always good to see to you. i did cash you -- calf -- catch you the other day, and you were talking about a good underlying economy here x. i thought by ebbs tense does that put more -- extension put more pressure on the federal reserve to go ahead and raise rates much as the

europeans kid this week? -- did this week? >> well, look, the fed's in kind of a pickle, neil, because consumption is strong. retail sales came can out pretty strong. not the rest of the economy. i mean, we had a bad production and a bad manufacturing number today. that's been weak now for three or four months. housing really is still in a recession, although housing starts did come up better, a a lot of apartments were started. but on the one hand, they've got still strong consumption, and on the other hand, let's face it, although the inflation numbers is have come down which is good, nonetheless, they're still basically running 5-6% or some such. that's, you know, three times the fed's 2% target. so the fed's got -- they're going to have to make a decision. if i had to guess, i think they're going to pause next week because of this banking problem.

but i don't think that pause is permanent. some people think the pause will lead to a decline in rates. i don't believe that at all. remember, the fed has already started pumping new money in for some of these rescue attempts. you look at their balance sheet, it's starting to grow again. so the fed's in a tough spot. so if there is a pause, that's not the last we're going to hear about a right thenning. i think that's the story -- tightening, that's the story. neil: what's weird is the other story about the rates the fed can't control. obviously, they can signal, but what we're looking at right now the 10-year, the 2-year and all that, that had collapsed. the 10-year now around the 3.40%, sharply lower, mortgage and other borrowing rates. what do you make of that? >> well, look, the market's adjusting to various expectations. again, right now i think the banking crisis or whatever the banking thing is. i'm not sure it's really a crisis, but there's a lot of jitters in the financial sector.

and it's sort of a deflationary impact, i think. some of these rates, i think, are going to fall too far. they may jump up later. but, look, you know, the big, big, big question as you well know is whether there's going on contagion. i mean, i don't understand, neil, there's stuff here that i don't understand. but this first republic bailout of jpmorgan, by jpmorgan and some ten other odd banks, i'm not sure how you do that, and i'm not sure how fast they can do that, and i'm not sure why the fed isn't using its new lending facility with the treasury which i think is good policy. and i think it would be unwise for them to guarantee the uninsured deposits, because that's going to create crazy moral hazard. so i'm just saying what's going on here, i don't think anybody really knows. i don't think anybody's really confident about what's happening with first republic. and i don't think there's confidence about some of the

other regional banks. is it a liquidity problem, is it a cue ration problem, is it -- duration problem, is it a solvency problem, possibly the loans are not as good as they need to be, these questions have to be answered. neil: you think about it, larry, i was told that if you include the three banks that got direct funds, it totals actually $165 billion worth of funding that has gone to distressed regional banks, i guess for want of a better term, and if you think about it, it's done squat to help them. and i'm wondering if that gives other institutions that have been part of this cash lifeline say, no, no, no, no more of our cashing we're done with it, and it feeds on something worse. what do you think? >> well, i just don't know. i mean, one of the mysteries, to me, is why the fed which put this credit line together, and it's sound banking policy. it's right out of walter

badgeet, right? you should lend freely with good collateral at a penalty rate, and that's the way this thing has been set up. i don't know why it wasn't used last weekend or, you know, on monday prepared last weekend concern the. neil: right, right. >> i don't understand why does the fdic have to go in and bail out the uninsured deposits. i don't understand it. they could have used the fed line, they could have used the fed discount window. some banks are using the fed discount window as you pointed out, but there's an awful lot of questions here, and confidence at the moment has not returned. and so turmoil in the stock and bond markets are likely to continue. neil: larry, you and i are probably old enough to remember when the s&l crisis was going on, i had the former fdic chairman at the time, and he was reminding me that hundreds of s&ls went bye-bye or were merging at that time.

do you think we'll see something like that, and would that be a healthy development? >> i don't know. i mean, i think this is different from the s&l crisis because the s&l crisis was formed, you know, you had deposit rate limits until they were deregulated by reagan. so i think this is different. neil, i thought you were going to ask me about 1907 when jpmorgan put all those banks in his library and wouldn't let them out until attack had helped the banks that were in trouble -- [laughter] or when j.p. mayor began met with president theodore roosevelt and said your man should talk to my man, and we'll work this out. and then morgan went and borrowed a lot of money from john d. rockefeller sr., and they solved it that way. we were both around during those periods, neil. that's what i think this is closer to. [laughter] neil: you're right. you know, you mentioned this isn't a crisis, and it's not that.

i mean, you always hear yet, and i wonder -- and i've mentioned this with a lot of other guests, larry -- if through no fault of their own, would a lot of other very good regional banks with sound, you know, business practices get caught up in this whirlwind of customers who bolt for the safety of a bigger bank, let's e say, where deposits from bank of america, whales -- wells fargo, citigroup, i think, have eclipsed $20 billion over the last week with more to come and they're caught up in that. >> well, you see, i'm trying to figure out -- maybe you know, i don't know the answer yet -- if you have an uninsured deposit and you look the it out of first republic or you took it out of silicon valley bank or someplace and you put it into, let's say, jpmorgan or bank of america, how are those uninsured -- this rescue plan is about uninsured deposits. so how do you -- you've9 got to get in touch with the depositor, don't you?

the depositor owns the deposit. the bank doesn't own that. so they're going to have to cull through? i think, now, there may be a shortcut way to do in that they're probably maybe inventing or reinventing, but i guess one issue is it may take time to inject this $30 billion into first republic if everybody agrees. i mean, neil, if you put your money in jpmorgan and you tight out of first republic -- took it out of first republic and you get your monthly statement a couple of weeks later and it still says first republic, i'd think you'd have a problem, wouldn't you? if wait a minute, i thought i transferred it over, and now they're saying i can't do that? really? so that may be a small issue, but i don't understand it, and i'm talking to banking experts. we're going to have a lot of that on our show this evening to to try to figure out how this is going to work or how fast it's going to work. neil: yeah. the die is cast for insuring more than just $250,000 an individual or half a million for a couple, and i wonder how the

government breaks from that, if it can break from that. because what you do for one, people are going to say, hey, you've got to do for me. >> well, i think, you know, that's another issue. neil: yeah. >> if the fdic decides in its wisdom or lack of wisdom that they're going to start garon' thing all kinds of uninshired deposits, i mean -- uninsured deposits, i think that would be a huge mistake. i think all bloody hell would break out about the moral hazard. and how do you choose? how coyou choose? senator lankford asked yellen yesterday would his small banks in oklahoma be eligible to be covered by the fdic, and she basically said, no. so you got a financial problem and a political problem. so i think concern use the fed's lending facility, for heaven sakes. i don't understand why that hasn't been geared up. and that may extend out to a whole bunch of other regional banks, but all that's going to

the take time which is one reason i think you'll see the fed pause next week. i don't think they want to jump in with another tightening just yet. neil: that would be something something if that happens, because that could also be read another way, what do they know that we don't know. larry, have a wonderful st. path my's day, wonderful weekend. the host of "kudlow," larry kudlow. you'll see him in a little over 3 hours. in a little over 14 minutes, jackie deangelis on "the big money show." jackie: that's right. we are all over the markets as we head into the weekend. wall street still a little jittery about what's happening in the bank space. we also have congressman pat fallon, we're going to ask him about the investigations into hunter biden's laptop, and kennedy the nation, she's stopping by to have a good conversation with us. can't wait to see you, 1 p.m. eastern i'm the, top of the hour. more "coast to coast" after this. ♪ ♪

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>> you are the definition of a moral hazard. >> moral hazard is something i don't take lightly. >> if the private sector rewards any type of thing and the moral

hazard goes to the taxpayers, we have a problem. >> the markets have already punished the people whom you are referring to. [background sounds] >> do we really have a limit on fdic insurance? if you don't, it becomes a moral hazard. >> the government said, okay, we've got concern about the overall banking system, let's guarantee everything. that's moral hazard right there. neil: all right. you're already hearing a lot about moral hazard9 and the risk of going too far with our cash, our tax dollars that makes their way to the banks and we are cynically led to believe, ultimately, to us. sheila bair joins us now, former fdic chair. she lived through a lot of that craziness. sheila, very good to see you. i wonder how far this goes. we're talking increasingly about moral hazard, maybe the latest proof might be the melting down of these bank stocks, the very banks that were rests cued or provided sort concern rescued or provided sort of a cash lifeline

that's doing them no good. their stocks are still melting. what do you think of that? >> well, i think beer is setting in. fear concern fear is setting in, fear, not rationality. and the problem was they did bailouts of these who the mid-sized banks, very tiny parts of the overall system, in the name of systemic risk. and that created a lot of uncertainty. well, what's going on, now who's protected and who isn't. neil: yeah. >> they're trying the imply that all uninsured are protected which is concern the they don't have legal authority to do, frankly, and this is putting pressure on community banks now. the big banks are going to protect them, uninsured goes fitter thes, you won't -- depositors, you won't. it's troubling. i believe in moral hazard. you need market discipline to complement the supervisory process. you lose that, you make the system more unstable. but now i fear the immediate problem is, is the uncertainties are creating broader scale runs, and they may need to go to

congress and, frankly, they should if it gets out of hand and get the approval to cover everybody because otherwise they're going to be killing the community banks and some of the, you know, smaller regions who are not viewed as, quote-unquote, systemic. and who the heck know what is that means anymore. neil: what happens when people then say concern and their bank might be just fine, their regional, small bank -- >> most of them are, the vast majority are, yes. neil: they don't want to take any risk, so they want to move their money to a bigger bank. that too could lead to meltdown, couldn't it? >>ing ed. that's exactly what's going on -- it could. that's exactly what's going on now. the better way to communicate would have been to handled these two bank failures with the regular fdic process which would have involved sizable dividends this week, remind people there are deposit insurance limits, remind people that some banks and do fail, they need to be vigilant and leave it at that. and, you know, i think creating

this country certain -- uncertainty now, sayingst the systemic as opposed to a couple of, you know, there are some other banks that had some problems, but it's a very small percentage of the overall banking system. we want discipline on them. we want their managers and larger depositors having conversations, getting themselves stabled up. but now there's this mass confusion, well, are we going to get bailed out? okay, maybe we don't the need to worry about it then. who's not going to get bailed out. the communication has been highly problematic. and you're right, if people start to panic and take deposits out of a perfectly healthy bank, they're going to force that bank to close, you know? it's a classic jimmy stewart problem as we've discussed before, banks lend it out, they invest in securities. it's the not all sitting in a vault. if you try to get all the money out at once, you're going to force the bank to unnecessarily fail. so i think that is, the immediate problem is that. and as much as i hate to say it, they may need to do more

bailouts, not less, through the system. if it's systemic, then provide a blanket guarantee temporarily. we ended up having to do that during the great financial crisis, but it worked and then we took it off. but, you know, they may have to do that, may well have to do that. neil: do you think we're on the verge of a lehman moment, or can we avoid that? >> yeah. well, i think this is more of a bear stearns moment. i think a lot of people, including me, said when they bailed out bear stearns, they increased moral hazard. they created an expectation of more bailouts, and there's no doubt in my mind lehman brothers would have sold itself, raised more capital, all of the above if they hadn't thought in the back of their minds, you know, they wouldn't dare not bail us out, we're bigger than bear stearns. that's the problem, that's the expectation the, you don't do a bailout and then you really have the system seizing up as we saw when lehman brothers went into bankruptcy. neil: well put. sheila, thank you very much. >> my pleasure.

thanks, neil. neil: that was then, let's hope it doesn't happen now. more after this. ..

neil: may be a selloff. you can change this. >> i was interested in the last comment larry kudlow made that the fed will pause and how you can read into that. this is very dicey and wall street is looking.