A drop in realestate values did affect banks and a natural extension of that is the effect they are having on state and local tax coffers. This is not going from engineering to Japanese art. People who have a vested interest in managing muni portfolios are seeing investors head for the exits and are trying to jawbone them to stay. As mortgage investments used to be considered AAA not all investors either in or near retirement feel the risk of sticking with muni debt when corporate debt and even equities offer more transparency and an ever increasing level of credit quality. The smart thing to do is to be flexible, avoid muni paper from states in denial and get back in after the finances begin to improve.