The problems of two small banks on the West Coast are rippling across markets and causing new investor concerns about some of the country's largest financial institutions.

Why? Three words: rising interest rates.

The Federal Reserve's aggressive campaign to bring down inflation helped set the stage for major problems at two California lending institutions — SVB Financial (SIVB) and Silvergate Capital (SI) — as an outflow of deposits forced both to sell assets at a loss. Those assets were bonds.