This is CNBC's live blog tracking Tuesday's hearing on the collapse of Silicon Valley Bank and other lenders before the Senate Banking Committee. Check here for live updates.

The nation's top bank regulators will face tough questions for the first time Tuesday about how Silicon Valley Bank and Signature Bank collapsed practically overnight earlier this month.

Martin Gruenberg, chairman of the Federal Deposit Insurance Corporation, Michael Barr, vice chair for supervision at the Federal Reserve and Nellie Liang, undersecretary for domestic finance at the Treasury Department will all testify before the Senate Banking Committee at a hearing on the recent bank failures starting at 10 a.m.

The regulators will also defend the decisions they made in the hours after the collapse, particularly the unanimous vote to invoke the systemic risk exception to the FDIC's deposit limit, according to their written testimony released ahead of the hearing.

This allowed the FDIC to guarantee hundreds of billions of dollars in uninsured deposits at the banks, money that might otherwise have been wiped out.

Both Republicans and Democrats on the 29-member panel questioned whether these deposit guarantees amounted to a government bailout for rich account holders.

But according to Barr, regulators were more afraid that if they did not backstop deposits, what started as a contained shock could explode into a full-blown financial crisis.

"The prospect of uninsured depositors not being able to access their funds could prompt depositors to question the overall safety" of all U.S. banks, he said in his prepared remarks.

While the witnesses Tuesday agree that plenty of blame lies with the banks' executives, they also say the collapse of SVB and Signature exposed gaps in how regulators measure risk.

"One clear takeaway from recent events is that heavy reliance on uninsured deposits creates liquidity risks that are extremely difficult to manage," the FDIC's Gruenberg said in his written testimony. "Particularly in today's environment where money can flow out of institutions with incredible speed in response to news amplified through social media channels."

Treasury's Liang says quick action by financial regulators protected the banking system, economy

Federal intervention softened the fallout from the collapse of Silicon Valley Bank and Signature Bank and protected the U.S. financial system, according to Nellie Liang, under secretary for domestic finance at the Treasury Department.

"Nearly three weeks ago, problems emerged at two banks with the potential for immediate and significant impacts on the broader banking system and the economy," Liang says in her opening remarks. "The federal government took decisive actions to strengthen public confidence in the U.S. banking system and protect the American economy."

This approach was two-pronged: First, the FDIC guaranteed all deposits at the failed banks, and second, Treasury created a new term lending facility to make cash available to banks experiencing a rush of withdrawals.

These actions, "helped to stabilize deposits throughout the country and provided depositors with confidence that their funds are safe."

Liang also emphasized the importance of small and medium sized banks, a nod to the debate underway over whether the failure of a medium-sized bank like SVB posed a genuine, systemic risk to the broader economy.

"Small and mid-size banks, including community banks, serve a vital role in providing credit and financial support to families and small businesses. Smaller banks provide 60% of loans to US small businesses," says Liang.

— Chelsey Cox

Panel's top Republican will argue inflation under Biden contributed to SVB's collapse

Sen. Tim Scott, S.C., the Senate Banking Committee's top Republican, will argue at Tuesday's hearing that the Biden administration deserves the lion's share of blame for SVB's collapse.

"The ranking member will focus on the message that the turmoil in the banking sector is a three-part failure caused by bank mismanagement, supervisory neglect, and the Biden administration's inflation crisis, which caused the need for rapid interest rate hikes," a Scott spokesman told NBC News.

They appear to be the same themes Scott laid out during a March 16 hearing with Treasury Secretary Janet Yellen.

"First, the bank failed because of its management and because of its board," Scott said at that hearing before the Senate Finance Committee, referring to SVB.

"State and federal regulators failed to appropriately use the tools they have to supervise and regulate the failed institutions," he added. "And Biden's handling of the economy contributed to these banking failures." 

— Christina Wilkie

Correction: This post was updated to correct the date of the Senate Finance Committee hearing. It was March 16.