The fallout and confusion generated by the news of New York State's deteriorating finances will pulverize almost all the profits that firms were expecting to make on underwriting a $425 million Metropolitan Transportation Authority bond deal.

But the syndicate, led by Goldman Sachs & Co., braved the bad news, dropped the profits, and bough the MTA bonds, after hours of confusion and heated debate between the syndicate members, state and authority officials. One of the issues was whether the deal should be pulled from the market. In the end, Goldman officials told the authority they would go ahead with the purchase of the bonds.

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