"Mismanagement" and "greed" on the part of Ambac Assurance Corp. has prevented the insurer from meeting "its obligation to provide credit enhancement" and cost New Orleans more than $2 million, according to a lawsuit filed by the city in federal court July 17.

The city has sued both Ambac and UBS Securities LLC, alleging Ambac's decision to back risky structured finance products and UBS's failure to remarket $171 million of taxable pension revenue variable-rate demand obligation bonds is costing the city $400,000 a month in increased interest payments. The suit was filed in the U.S. District Court for the Eastern District of Louisiana.

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