I must switch off the TV set and get away from the Goldman Sachs grilling. The more I watch it the more the feeling sinks in - this is not about legalities, its about morality.

As a bank, GS will keep up with the defense that their job is to make a market. At some times, they will be holding securities which are the other side of their client's trade. At other times, they will sell securities, which may not do well or perhaps which they think will not do particularly well, so long as there are knowledgeable counter-parties willing to price the risk component. The former is them as a market maker, the latter is them as a prop trader.

Fine.

The question arises when they believe a product is an unsound one or else they don't even understand the product but they go out and sell it - is that illegal? No. Is it wrong? Yes. 

Can it be punished in a court of law - I seriously doubt that.

Should it be regulated against? Absolutely.

Frankly, I think the US and the rest of the world along with them is just facing the effects of the repeal of the Glass-Steagall act. Banks with retail savings should not be making hedge fund like bets and trading organizations shouldn't need to be bailed out by governments.