A senior Democratic congressman has demanded that the Treasury and Federal Reserve disclose what they knew about $3.6bn in bonuses Merrill Lynch paid out last year, days before its government-brokered take-over by Bank of America.

Dennis Kucinich, chairman of an investigative House subcommittee, said the Merrill pay-outs were a bigger scandal than the $165m AIG bonuses , which triggered an explosion of anger when they came to light this month.