The financial sector has been under intense scrutiny after the failure of two large financial institutions that specialized in high-risk industries, such as the cryptocurrency sector. Some depositors in local communities might be wondering what this means for their hard-earned money, and rightfully so.

But consumers, and policymakers in Washington, must distinguish between community banks, which have been serving consumers and small businesses in Nebraska for 156 years, and these large banks with a much different business model and risk profile. The financial institutions recently closed by regulators were nothing like the local community banks that help Nebraskans thrive.

Before its closure on March 10, Silicon Valley Bank (SVB) was the 16th largest bank in the nation, with $213 billion in assets at the end of 2022. Much of this growth was propelled by tech companies that were flush with cash during the pandemic, and these same depositors quickly began withdrawing their funds amid concerns about the bank’s liquidity. It was a boom-and-bust cycle fueled by SVB’s heavy concentration in a single sector of the market.

Signature Bank of New York, which failed just two days later, also suffered from a concentrated balance sheet. Fueled by the SVB panic, depositors quickly began to withdraw their funds. Regulators closed the bank to prevent additional bank runs and to ensure that the Federal Deposit Insurance Corporation would be able to make depositors whole.

The Deposit Insurance Fund, which the FDIC uses to insure deposits, currently has a record high balance. Nebraskans do not have to worry about the safety of their deposits, and that is especially true for customers of community banks.

Community banks have a unique and time-tested model, followed by local banks in communities across Nebraska and the nation, one that is best suited for consumers and business owners. That’s because community banks stress one-on-one, face-to-face relationships with the small businesses and residents they serve. They know what small businesses need because they are one. With a reliance on relationships and their reputation, community banks are dedicated to looking out for their customers’ long-term interests.

This isn’t the first time community banks have weathered a financial crisis, with local institutions proving stable during the 2008 Wall Street meltdown and the COVID-19 pandemic. Community banks are here for Nebraskans through every stage of the economic cycle, and they have been for decades.

Given their historically cautious approach, Washington lawmakers should ensure that whatever regulations that result from the SVB and Signature Bank closures do not harm community banks.

As responsible financial stewards, community banks should be exempt from restoring losses to the FDIC’s Deposit Insurance Fund, and there is no need for new regulatory burdens from Congress or federal regulators. Small lenders and their customers shouldn’t have to pay for the miscalculations and speculative practices of large financial institutions.

If anything, the collapse of SVB and Signature Bank shows that the existing tiered regulatory model works. Rules should recognize and account for institutions of different sizes and risk models. Given the continued stability of Nebraska’s community banks, lawmakers need to ensure that policy changes support these local lenders and only target the risky practices of other, larger lenders.

These bank failures highlight the strength of Nebraska’s community banks. Banks all across the state are ready and willing to meet you anytime and anywhere to show Nebraskans that their responsibility is to you, not to Wall Street or Silicon Valley.

This story was originally published by Nebraska Examiner, an editorially independent newsroom providing a hard-hitting, daily flow of news. It is part of the national nonprofit States Newsroom. Find more at nebraskaexaminer.com.