Wall Street bank denies profiting from financial crash by fraud

But they were met with angry questions from a Senate panel

investigating Goldman's role in the financial crisis and the Securities and Exchange Commission fraud suit against it and one of its traders.

The hearing comes as President Barack Obama and Democrats are trying to push through a financial regulations overhaul.

The senators are looking into allegations that Goldman deliberately plotted to profit from the US housing meltdown and reap billions at the expense of clients.

Federal regulators said Fabrice Tourre, a 31-year-old trader at Goldman marketed an investment designed to lose value. In a January 2007 e-mail, Tourre called himself "The fabulous Fab ... standing in the middle of all these complex ... exotic trades he created."

He told senators he did not remember telling investors that a Goldman hedge fund client had bought into an investment when in fact the hedge fund, Paulson, bet against the security – and profited handsomely.

"I deny – categorically – the SEC's allegation," Tourre said. "And I will defend myself in court against this false claim."

He was one of several Goldman officials to appear before the Senate's investigating panel.

Committee chairman Carl Levin said Goldman Sachs wreaked havoc on the economy.

"Its conduct brings into question the whole system of Wall Street," he said of the investment banking firm, one of the few to emerge from the financial crisis larger and stronger than before.

The hearing also came as the Senate grappled with new laws to overhaul the US financial regulation system and prevent another meltdown. The legislation would crack down on the kind of lightly regulated housing market investments that helped set off the crisis.

Mr Levin accused Wall Street firms of selling securities to clients that they would not invest in themselves. That's "unbridled greed in the absence of the cop on the beat to control it," he said. The overhaul bill would "put a cop back on the Wall Street beat."

Criticism of Goldman's behaviour came from both parties.

Republican senator Susan Collins said Goldman officials were "celebrating the collapse of the housing market when the reality for millions of Americans is loss of homes and disappearing jobs."

"There is something unseemly about Goldman betting against the housing market at the same time it is selling to its clients mortgage-backed securities of toxic loans," she said.

Chief executive Lloyd Blankfein said in his prepared testimony that Goldman did not bet against its clients and could not survive without their trust.

The SEC says Goldman concocted mortgage investments without telling buyers they had been put together with help from Paulson who was betting on the investments to fail.

Goldman disputes the charges and says it will contest them in court.

Blankfein repeated the company's assertion that it lost $1.2bn in the residential mortgage meltdown in 2007 and 2008 that touched off the financial crisis and a severe recession.

He also argued that Goldman was not making an aggressive negative bet – or short – on the mortgage market's meltdown.

Goldman has fought back against the fraud charges with a public

relations blitz aimed at discrediting market regulators.