Inside the Goldman Sachs Hearing Room

"You are the bookie you are the house," said Sen. Claire McCaskill to a panel of former and current Goldman Sachs executives. Her statement might have been simplistic, but it boiled down today's hearing, "Wall Street and the Financial Crisis: The Role of Investment Banks" to the basic issue at stake.

(Left, Daniel Sparks, former head of Goldman Sachs' mortgage department, testifies before the Senate Permanent Subcommittee on Investigations, April 27, 2010.)

"You had less oversight than a pit boss in Las Vegas," McCaskill continued, "You were more worried about a bad article in the Wall Street Journal than a regulator."

Daniel Sparks, a former Goldman Sachs partner, resisted the comparison: "I'd like to avoid the betting analogy."

But Nevada Senator John Ensign said the gambling analogy was too generous. Unlike the bets Goldman made, Ensign noted, at least gamblers bet against the house and bet with their own money. The money Goldman Sachs played with was not their own, and it represented other people's futures, Ensign said.

While the massive, 901 page binder of exhibits indicated the depth of the investigation, it also served as a convenient foil for the former Goldman Sachs executives during their interrogation. Rather than answer questions, they often killed time by flipping through the huge binder of documents as they tried to find the exhibit their questioner was referencing.

It wasn't all contentious: at one point during questioning Daniel Sparks conceded, "credit standards got too loose...risk was not respected." But for the most part, the former executives stuck to shifting blame. In the words of Michael Swenson, Goldman Sachs Managing Director: "I do not think we did anything wrong."

In fact, Goldman Sachs did everything right for their bottom line.

Emails from 2007 included in the exhibits reveal Goldman Sachs executives saw what no one else in the business did at the time: it was time to go short and dump the toxic assets. In a March 3, 2007 internal email Sparks told Goldman traders explicitly: "Get out of everything."

Chairman Carl Levin, the Democratic Senator from Michigan whose Permanent Subcommittee on Investigations has been digging into Goldman for over a year and a half, did not restrain his outrage when questioning the panel members. When Sparks told Levin he didn't have any regrets, Levin scolded him sharply, saying: "you should've had some regrets."

But for his part, all Sparks could do was stare intently at the pile of documents before him.