After the failure of SVB Financial (NASDAQ: SIVB), the parent company of Silicon Valley Bank, the entire banking industry sold off last week on fears over broader contagion and whether other banks could face similar issues.

While it's certainly a scary time and simply shocking to see such a large bank that had performed incredibly well for decades fail so quickly, I consider SVB to be more of an outlier and that the broader banking system is in much better shape, particularly among the "too big to fail" banks like JPMorgan Chase (NYSE: JPM) and Bank of America (NYSE: BAC). These banks have ample liquidity, as I'll explain below.

SVB's failure was different than what occurred during the Great Recession in that it wasn't a credit story but a deposit, bond, and liquidity story. SVB catered heavily to the start-up, tech, and venture capital (VC) industry, so in 2020, when venture capitalists were deploying lots of capital and start-ups were raising money at huge valuations and going public in droves, deposits surged at SVB.

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Source Fool.com