Washington, DC - The political firestorm over the $165 million bonuses to executives at the failed American International Group (A.I.G.) that ripped through Washington, DC, in mid-March could be reignited by further attention on failing financial companies who were given taxpayer dollars then turned around and spent the cash on bonuses.

    Anger over the bonuses at A.I.G. blew back onto members of the Obama administration as it was revealed that Treasury Secretary Tim Geithner and others had been aware of the bonus payments but failed to halt them and did not express "outrage," until the bonus checks were already cashed. Further revelations of backroom dealings and million-dollar bonuses threaten to make any kind of assistance to financial institutions politically impossible for Congress.

    A larger and potentially far more explosive powder keg of bonus payments - this time to top executives at now defunct Merrill Lynch & Co. Inc. - may be about to blow.

    Ongoing investigations at the New York attorney general's office and at the office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) into this previously revealed, but mostly ignored, story may add new details about who in the Bush administration, in the financial sector and at the Federal Reserve knew about these much larger bonuses and the suspicious circumstances surrounding them.

    In its last days as an independent company, Merrill gave performance-based bonuses exclusively to employees earning $300,000 a year or more and holding a rank of vice president or higher, according to their financial statements. $3.62 billion was handed out to these executives - a sum equal to 36.2 percent of the $10 billion in taxpayer funds that were allocated to Merrill as part of the Troubled Asset Relief Program (TARP) before the bonuses were paid.

    The company had been failing as a result of misadventures in the now infamous mortgaged-backed securities market which began crumbling with the decline of home values as the bubble burst.

    The performance bonuses were determined by Merrill's compensation committee on December 8, 2008, before Merrill revealed that it lost $15 billion in the final three months of 2008, unusual timing according to court documents filed by New York Attorney General Andrew Cuomo in an ongoing suit against Merrill's former CEO.

    In prior years, Merrill paid performance bonuses of this type after the end of the year, in January or February of the next year.

    Congressman Dennis Kucinich (D-Ohio), the chairman of the House Domestic Policy Subcommittee under the Oversight and Government Reform Committee, signaled interest in investigating the bonus payments in a letter to Federal Reserve Chairman Ben Bernanke and Neel Kashkari, an interim Bush hold-over at the Treasury Department, who has been in charge of the TARP program since the beginning.

    The letter states that Merrill was not in "a sustainable financial position to award such bonuses without the considerable amount of US taxpayer funds ... TARP funds therefore could have had a decisive effect in funding the bonuses ..."

    The letter pointed out that the bonuses at Merrill "were not locked in by preexisting contract and were performance bonuses, as opposed to retention bonuses."

    During the A.I.G. bonus scandal, it was pointed out that the A.I.G. bonuses were locked in by contract and were thus more difficult to revoke. The A.I.G. bonuses were also structured as "retention bonuses," or money to keep people who were essential to the company's wind-down operation. While A.I.G.'s excuses fell short for critics, Merrill doesn't even seem to be able to make the same argument.

    Kucinich requested "all documents" relating to communications between the Federal Reserve, Treasury department and Bank of America. Bank of America bought what was left of Merrill after a shotgun marriage was arranged by Bernanke and then Treasury Chairman Henry Paulson. Bank of America CEO Ken Lewis also received a letter of inquiry from Kucinich.

    The questionable timing and the amounts of these bonuses were not revealed to Bank of America shareholders when they voted to acquire Merrill. These facts raise questions about what government officials knew about the bonuses and when they knew it, according to Kucinich's letter.

    "If ordinary [Bank of America] shareholders were ignorant of the details of the Merrill bonus arrangement, was the US government as well?" the letter asked, after pointing out that the US government owned 800,000 shares of preferred stock in Bank of America and federal officials met with both banks on a regular basis.

    The letter said that Paulson and Bernanke met with Lewis in mid December 2008 on several occasions to keep Bank of America on board in the deal to buy Merrill. Bank of America subsequently received an additional $20 billion (for a total of $45 billion) in government funds and a $118 billion guarantee against potential losses in risky investments - a huge pillar of support from the government.

    It is yet to be established by any investigation whether executives at Merrill and Bank of America looted while the company crumbled at the expense of taxpayers and shareholders.

    The SIGTARP will release a "full audit" of the over $300 billion in TARP money that has been given to banks and other companies and where that money was then spent, according to a spokesperson for the office. The report will be released publicly in late spring or early summer.

    However - in all likelihood - the audit will not be released before the Obama administration's new bank rescue plan goes into effect. The plan, rolled out last week, would use billions more taxpayer dollars to back private capital from the financial sector and buy risky mortgages from the drowning banks.

    Kucinich's letter reflects the political difficulty the Obama administration faces in the wake of the A.I.G. bonus debacle and the popular mistrust of Wall Street: "The answers the subcommittee seeks will be of interest to the American public, who are rightly concerned about how recipient firms have used TARP monies, and how well the Federal Government has monitored the use of those funds and safeguarded them from waste and abuse."