When Warren Buffett announced his offer to back $800 billion worth of municipal bonds backed by MBIA (NYSE: MBI), Ambac (NYSE: ABK) and FGIC, the offer was blasted as being something less than helpful. Buffett himself admitted that "When I go to Saint Peter, I will not present this as some act that should get me in. We're doing this to make money."

Now, speaking on CNBC, Buffett said that offer is "not on the table."

The offer was seen as less than generous in that it offered no help for the most risk mortgage-backed debt and charged large premiums.

Given that, it's hard not be a little frightened by Buffet's decision to withdraw the offer. It's possible that he simply withdrew it because it was unpopular and poorly-received.

But if an offer that was seen as a gimme for Berkshire Hathaway (NYSE: BRK.A) is no longer appealing to Buffett -- that means things for the bond insurers could be considerably worse than previously thought.

And most people already thought things were pretty bad.