Mike Mayo of Calyon Securities issued “The 7 Deadly Sins of Banking” today, saying banking losses could be worse than the Great Depression. Mike Mayo of Calyon told clients to tell BB&T Corp. (BBT). His warning caused banking stocks to fall in Monday’s trading.

Mayo’s warning comes days after Jim Cramer told viewers no Depression is ahead. So who is right?

May’s report today “The 7 Deadly Sins of Banking” started coverage of 11 banks with sell or underperform rating. Says reports:

Mayo states that the recession is likely to persist and further affect commercial real estate loans. Mayo started Citi with a “Sell” rating, target $3; started JP Morgan at “Underperform” and a $24 target; Bank of America (NYSE:BAC) started at “Underperform”, target $8; Wells Fargo (NYSE:WFC) started at “Underperform”, target $14; Comerica (NYSE:CMA) initiated with an “Underperform”, target $16; and PNC Financial (NYSE:PNC) started at “Underperform”, target $8.

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WaMu has filed a new $13 billion lawsuit against the FDIC.! Washington Mutual is suing the FDIC for $13 billion over the loss of banking operations eventually bought by JPMorgan Chase & Co.

In the case is Washington Mutual Inc v. Federal Deposit Insurance Corp, U.S. District Court for the District of Columbia, No. 09-00533, WaMu says the FDIC engaged in a “cryptic disallowance” of its claims, initiating a substantially low sale price of $1.9 billion for banking operations.

WaMu in the lawsuit reportedly hopes to recover:

- $6.5 billion of capital contributions from 12/2007 to the date of the FDIC seizure

-$4 billion of trust preferred securities

-$3 billion of tax refunds

– $177.1 million on unpaid loans

The FDIC is not commenting.

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AIG paid $165 million in retention bonuses. 11 persons got AIG retention bonuses who aren’t even with AIG anymore, says New York Attorney General Andrew Cuomo to Barney Frank today.

Cuomo says 73 individuals got $1 million or more, 7 even got more than $4 million. In total, 10 employees got $42 million.

Now Cuomo reportedly doesn’t want the retention bonus holders to be able to … retain .. their bonus. Subpoenas are out for the names of the individuals. At issue: whether state law was violated in paying those bonuses.

But Congress has a better idea – tax tax and tax! Senate Majority Leader Harry Reid has said the following:

“Recipients of these bonuses will not be able to keep all of their money.”

If the bonuses aren’t returned, Congress is set to pass a law that will cause bonus holders to be taxed 100% for any AIG bonus over $100,000.

Earlier today LALATE told you what Sen. Charles Grassley’s suggestion is:

“Obviously, maybe they ought to be removed. But I would suggest the first thing that would make me feel a little bit better toward them if they’d follow the Japanese example and come before the American people and take that deep bow and say, I’m sorry, and then either do one of two things: resign or go commit suicide.”

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Merrill Lynch’s Alexis Stenfors is under investigation. Alexis Stenfors posted $120 million in the currency trade losses at Merrill Lynch before the Bank of America (BAC) acquisition of Merrill.

Yes, $120 million by Alexis Stenfors alone in 2008. And some reports say Alexis Stenfors got a huge bonus.

Marketwatch says:

Bank Of America may have recently uncovered at least $120 million of losses attributable to one London trader, and “hundreds of millions” of other losses on derivative trades, The New York Times reported. According to the report, the losses occurred before Bank of America’s rushed acquisition of Merrill Lynch and were missed by bank accountants reviewing Merrill’s books. The Times report identified the trader reportedly responsible for the currency losses as Alexis Stenfors. The report said Stenfors told the paper the matter was a “misunderstanding.”

Schaeffer’s says

Bank of America Corporation has uncovered more unexpected losses from its acquisition of Merrill Lynch, according to the New York Times. London-based currency trader Alexis Stenfors apparently scored a bonus after he recorded a profit of $120 million in 2008. After B of A’s risk officers noted irregularities in his trading account, a further investigation revealed that Stenfors seems to have lost quite a bit of money on his currency trades, rather than the handsome profit he recorded.

Another day, another Merrill shameless story.

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Merrill Lynch made Andrea Orcel rich. Merrill Lynch paid $33.8 million to Andrea Orcel in 2008, and $10 million or more to 10 other top executives that year, claims a new report.

LALATE told you about the John (Commode on Legs) Thain several weeks ago. Thain, then Chairman and CEO, didn’t even take a bonus for 2008.

But 11 top executives did, each at more than $10 million says reports. That’s while Merrill lost $28 billion the same year.

What is with this company?

The WSJ reports today:

“While Merrill staggered, 11 top executives were paid more than $10 million in cash and stock last year. As bad as 2008 was for Merrill Lynch & Co, it was very good for Andrea Orcel, the firm’s top investment banker. Although Merrill’s net loss ballooned to $27.6 billion last year, Orcel, 45 years old, was paid $33.8 million in cash and stock, just shy of his pay in 2007.”

And the payouts don’t end there. 149 other people reportedly got $3 million or more.

$3 million is one thing. $34 million is another.

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