Federal Reserve Chairman Ben S. Bernanke is testifying today to a joint hearing of the House Oversight and Government Reform Committee, and House Domestic Policy Subcommittee. The purpose of the joint hearing is to examine events surrounding Bank of America’s $50 million acquisition troubled investment house Merrill Lynch in September 2009 and its receipt of Federal financial assistance.

The acquisition was supposed to save the American financial system from a destructive down cycle started by the imminent Lehman Brothers investment bank bankruptcy.  Within days, however, the entire global financial system was collapsing.

A blogger at the Wall Street Journal calls this acquisition of Merrill a “deal from hell” because it was negotiated in 48 hours; within a month of the acquisition, several key Merrill executives left; Bank of America required an additional $20 billion in Treasury support; $118 billion of government backstops; a $15 billion loss at Merrill that came after repeated assurances from both sides that due diligence was solid; the massacre in Bank of America shares, which have fallen 78% since the bank agreed to acquire Merrill on Sept. 15; lawsuits surrounding the surprise announcement of the Merrill Lynch loss; the revelation that Lewis himself contemplated calling the whole thing off in December; and widespread fears of even steeper losses on Merrill’s troubled assets.

Last week, these same committees heard testimony from Bank of America CEO Ken Lewis on its acquisition of Merrill. Lewis testified that his job was threatened after he expressed second thoughts about the deal. Lewis said then-Treasury Secretary Henry Paulson and federal regulators made clear that if Charlotte-N.C.-based Bank of America Corp. reneged on its promise, that he and the bank’s board members would be ousted.

For more information on the merger and the effect on the economy, check out this Frontline story.