Fitch Ratings cut FGIC's financial strength rating Wednesday to double-A from triple-A, and it did the same to Ambac earlier this month.

FORBES: Bond Insurers Need Help--Fast

Ambac, FGIC and other big muni-bond insurers have weakened considerably.

FORBES: Munis: Better Than Treasuries?

Before the market blew up, state and local governments could reassure bondholders that if they ran into financial trouble, their bonds would be honored by specialty insurers, like MBIA , Ambac and Federal Guarantee Insurance Company (FGIC).

FORBES: Munis: Better Than Treasuries?