Phoenix Sues Ambac, Others Over Steep Bond Rates

Law360, New York (March 16, 2010, 3:15 PM EDT) -- The city of Phoenix has sued Ambac Financial Group Inc., MBIA Inc. and Financial Guaranty Insurance Co. for allegedly charging it bond insurance premiums higher than those charged to corporate bond issuers who presented more default risk, a discrimination the city claims has cost it more than $20 million.

Insurers are getting fat by forcing municipalities to purchase exorbitantly priced insurance for bonds in order to secure ratings, and thus low interest rates, that corporate issuers achieve without similar extortions, Phoenix said in a lawsuit filed...
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