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By Jim Christie

SAN FRANCISCO, July 24 (Reuters) - The city of Los Angeles has sued more than 30 Wall Street investment banks and municipal bond insurers, accusing them of reaping hundreds of millions of taxpayer dollars in illegal profits, while other California cities are preparing similar lawsuits.

"These cities are taking on Wall Street for the abuse they've suffered over the last couple of decades," said Joseph Cotchett, one of the private lawyers pressing Los Angeles' lawsuit, said on Thursday.

"Los Angeles was one of the victims ... there are more coming," said Cotchett, a Burlingame, California attorney who won a jury verdict for more than $3 billion in a class-action suit against Charles Keating, Jr. and associates arising from the savings and loan crisis of the 1980s and 1990s.

In an interview with Reuters, Cotchett said the suits argue bond insurance that municipalities must often buy is a "scam," adding the cases have the potential for major financial consequences for the municipal debt market.

"This wave of cases is going to make the subprime problem look minuscule," he said.

One of two complaints filed by Los Angeles in local court on Wednesday claims a conspiracy to prop up the market for bond insurance, a galling expense for municipalities given their low default rate, even when they lack sterling credit ratings.

The lawsuit, filed against bond insurers including Ambac Financial (ABK.N: Quote, Profile, Research), MBIA Inc's (MBI.N: Quote, Profile, Research) MBIA Insurance Corp, and Financial Guaranty Insurance Co, claimed Los Angeles was forced to purchase insurance from a triple-A-rated guarantor to benefit from that top rating.