Yes, the main private investment ratings firms–Moody’s and Standard & Poor’s among them–have been in the doghouse for rating many battered investments highly, not just munis. But most municipals rated AA or AAA may be generally safe to consider. It’s very important to check the issuer’s long-term ratings history. If they’ve been consistently highly ranked over decades and the municipality has no financial scandal (something that can be checked through news archives on the Internet), that’s another good way to research a bond issuer before making a municipal bond purchase.
Further, check to see if the rating depends on insurance. Insurance can prop up a weak bond, but not necessarily save the issuer from default. If an insurer is exposed to propping up many weak bonds, then the insurer is at risk, and so is your insured bond!