Part of the contagion is that the banks are crooked and holding debt from other banks and pretending they're assets. It's rampant. A banking contagion is like a chain reaction that starts when one bank gets into trouble and spreads to other banks. Imagine it like this: Bank A has lent money to Bank B, which in turn has lent money to Bank C. Now, if Bank A starts to struggle and can't pay back its loans, Bank B is also at risk because it won't get the money it was expecting from Bank A. As a result, Bank B might struggle to pay back its own loans to Bank C. This can create a domino effect, with each bank's problems leading to the next one having issues. The contagion spreads as more and more banks get affected by the initial problem. While it's true that some banks use accounting tricks to hide their issues, the main point is that the interconnections between banks can lead to a large-scale crisis when one of them fails.