The next big crisis for Wall Street — and New York City and State — could involve the fate of companies that insure billions of dollars in bonds.

A number of analysts are focused on the impact of these bond insurers on investment banks, with many estimating that a downgrade of the bond insurers’ AAA ratings could result in $70 billion in write-downs for investment banks already suffering from the subprime crisis. Fewer market professionals are focused on how a downgrade of bond insurers could constrain the ability of cities and states to finance everything from large infrastructure projects to repairs of water main breaks.

Municipalities buy insurance for their bonds to boost investor demand, which leads to cheaper financing. Those that provide this insurance, including MBIA and Ambac Financial Group, are facing insolvency because as the housing market deflates, they are having difficulty covering the losses on the risky mortgage-related bonds they insure. The ratings agencies are threatening to downgrade these so-called monoline insurers — indeed, a handful have already been downgraded ­— lessening the value of the insurance they offer. Regulators are working to find a solution, including encouraging new bond insurers that haven’t underwritten risky bonds to enter the market, but a plan of action has yet to be announced.

There are $2.6 trillion worth of municipal bonds outstanding in America, with New York State holding about 7.5%, or roughly $200 billion, according to research firm Municipal Market Advisors. Roughly one-third of these bonds — a total of 58,676 bonds — are insured, according to the New York State Insurance Department. New York City has about $64 billion in bonds outstanding, according to the New York City Office of the Comptroller, which didn’t release what percentage is insured. The money raised by bonds is used for everything from building affordable housing and schools to repairing sewerage systems to underwriting major capital plans.

“If bond insurance were not available, it is possible that the cost of borrowing would increase for some municipal issuers,” a spokesman for the New York State Insurance Department, David Neustadt, said. Many investors are restricted to buying only the highest-rated municipal bonds, and without insurance, many bonds do not meet that requirement. “So if that rating were not available, some issuers might have to pay a higher interest rate and have fewer potential buyers,” he said.

New York City has already seen a rise in its cost of issuing bonds. The city’s comptroller estimates that short-term bonds, which are refinanced every week, have risen by as much as 0.5 percentage points. As a result of higher prices, the city has stopped insuring most of its bonds.

“It is an area of concern in the municipal marketplace,” the deputy comptroller for public finance, Carol Kostik, said, adding that it has yet to have an impact on the city’s capital program. “The insurance story continues to unfold, and we are working actively to manage our risk exposure and monitor what is going on with credit and the price of bonds.”

Bond insurance has become a key topic for many on Wall Street. Analysts at London-based consultancy firm Independent Strategy estimate that American insurers are poised to lose $65 billion from bond defaults. They have capital to cover just about $50 billion of losses, and so will need some type of capital infusion for the remaining $15 billion. That is not all: The insurers will need additional capital to cover any new bonds they underwrite, so the firm estimates that any bailout plan would actually need to total as much as $140 billion.

“Among the myriad of negatives that surround financial stocks today, we see no issue more critical than the fate of the monoline insurers,” an analyst at Oppenheimer & Co., Meredith Whitney, wrote in a research note this week. She estimates that downgrades at the insurers could result in as much as $70 billion in write-downs for the investment banks. Three banks, Citigroup, Merrill Lynch, and UBS, would bear the brunt of the problem, shouldering about 45% of the market’s losses, she said.

One solution for the bond issuance problem is the creation of new companies to insure bonds that don’t have any risky assets. Investor Warren Buffet created one such company recently, and the New York State Insurance Department rushed to get the firm accredited so it could begin insurance underwriting.

“As an insurance regulator, it is our job to ensure that consumers, including individuals, businesses, and governments, have access to a healthy market in insurance products they need. That’s why we invited Warren Buffet to create a new bond insurance company in New York to make sure that governments will continue to be able to purchase bond insurance. We have also had discussions with other parties interested in entering the business,” Mr. Neustadt said.

Some say that any solution for the bond insurers is likely to be irrelevant because investors and issuers are already doing away with their services.

“The market is already discounting the insurance and looking at the underlying rating of the issuer instead,” a portfolio manager at municipal bond investor Cumberland Advisors, John Mousseau, said.

“In the long term, it’s better off without bond insurance because then investors rely on the actual issuer’s ratings rather than an outside entity,” a managing director at Municipal Market Advisors, Matthew Fabian, said.

Still, the solvency of the bond insurance industry remains a top priority, and its outcome is sure to have an impact on the markets.

“This is a big deal, but what it will mean for all the players is still to be determined,” the chief research officer at investment adviser McDonnell Investment Management, Richard Cicarone, said.