Last week's Chapter 11 filing by Ambac Assurance, which provides insurance on billions of dollars of MBS held by corporate credit unions (CUs), is likely to add to the price tag of the federal bailout of these wholesale institutions.

For the growing woes of Ambac — one of a half dozen troubled bond insurers that wrote insurance policies on private label MBS — means that the wrap will not be available as a growing number of MBS held by the corporate CUs go into default, increasing the losses on those bonds. 

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