States and municipalities are taking the needed steps to check their spending so that widespread municipal debt defaults aren't likely, says investor Wilbur Ross.

Fears of widespread defaults have skyrocketed recently, especially when start analyst Meredith Whitney told "60 Minutes" late in 2010 that defaults at the municipal levels could total hundreds of billions of dollars.

Not so, says Ross.

Wilbur Ross

States are tackling spending problems proactively and are righting their fiscal ships, unlike the federal government.

"What's good is the states are starting to deal with it more so than the Feds. That's the disconnect, and I find it very peculiar," Ross tells CNBC.

"Localities and states are really trying to deal with their entitlement-benefits issue. The federal government so far is ignoring Social Security, which is its analog for the pension funds."

Since Whitney's gloomy forecast, echoed by others, yields on municipal bonds have soared amid sell-off after sell-off.

Some say that's created an environment ripe for buyers.

"It's kind of a Warren Buffett mentality," says Guy LeBas, chief fixed-income strategist with Janney Montgomery Scott, according to CNNMoney. "Be greedy when others are fearful."

The market, LeBas adds, has been overreacting to the fears of a municipal meltdown.

"When we get a severely negative headline, the entire market reacts," LeBas says.

"But I would argue that the credit quality of government issues, remains, on average, extremely strong."