These banks are going under because they are holding mortgage-backed securities (bought when rates were low) in a high-rate environment. Because of the increase in mortgage rates, those securities are at least worth less than what they paid for them. Californians may not have been able to spot this problem, but it should be readily apparent to Texans who lived through the 1980s - it's very similar to the problems that brought down S&Ls, where at its core institutions were paying depositors more than they were receiving from borrowers.
Stimulus created by the Fed's 40% increase in money supply in 2020-2021 had to go somewhere; banks then bought bonds and mortgage-backed securities while the Fed Chairman, the Treasury Secretary, and the President told everyone who would listen that the excess cash wasn’t inflationary. If inflation came it would be “transitory.”
There are a number of well-known spurious correlations, like the 67% correlation between deaths by drowning and number of films starring Nicolas Cage, or the 95% correlation between per capita cheese consumption and the number of people who are strangled by their bedsheets. I guess the Fed would have us non-bankers and non-economists believe the correlation between Fed Funds rate increases and unrealized losses on bank balance sheets is another one of these.
This situation means the Fed is back to hiking rates, tightening its balance sheet while also injecting funds back into the markets. I used to work for a company who's motto was "we're building the plane while we're flying it." It's no way to run a company and no way to run a country, either.