The underlying muni's aren't faulting, right? You're losing liquidity, not assets --- why are people taking writedowns on these?
You've just described the current crisis in the credit markets. The crisis wasn't so bad when it started with higher-than-expected defaults in subprime credit markets, but people are panicking a lot more now that liquidity is drying up for high-quality assets. Many firms' business models are based around having access to sufficient liquidity, they aren't built to buy and hold.