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In a testy exchange at today's Senate grilling of Goldman Sachsexecutives, Sen. Carl Levin, D-Mich., confronted a former Goldman trader with an e-mail in which another former Goldman executive described a mortgage-backed deal as "sh**ty."

Levin, the chairman of the panel hosting the hearing, could barely contain his disgust as he cross-examined the former head of the bank's mortgage department about a bad deal that Goldman tried to sell its clients.

Internal Goldman e-mails from June 2007 showed that bank officials believed that a transaction known as Timberwolf was "one sh**ty deal."

"You sold hundreds of millions of that deal after your people knew it was a sh**ty deal. Does that bother you at all?" Levin asked Daniel Sparks, a former partner and head of the mortgages department at Goldman Sachs.

"Your top priority is to sell that sh**ty deal!" Levin emphasized, holding up the series of e-mails. "Come on, Mr. Sparks! Would Goldman Sachs be trying to sell -- and by the way, it sold it, a lot of it, after that date -- should Goldman Sachs be trying to sell the sh**ty deal? Well, can you answer that one yes or no?"

"There are prices in the market that people want to invest in things," Sparks replied. "I didn't use that term with respect to that deal."

The exchange was part of a tension-filled day of hearings on Capitol Hill where lawmakers are trying to determine what went wrong with the financial system in the past several years, causing trillions of dollars in losses for investors worldwide.

Sen. Susan Collins, R-Maine, followed up with a tamer, more PG-rated question.

"Do you have a duty to act in the best interests of your clients?" she asked Sparks.

"I believe we have a duty to serve our clients well," Sparks responded as murmurs were heard throughout the hearing room.

All but one of the four Goldman employees at the witness stand this morning refused to directly answer Collin's question.

While some of the Goldman witnesses conceded that they made mistakes, they denied wrongdoing.

"There's things we wish we could have done better in hindsight, but at the times we made the decisions, I don't think we did anything wrong," said Michael Swenson, a managing director at the firm.

Sparks said though he felt sympathy for Goldman clients who lost money, he said had no regrets.

"Regret to me means something that you feel you did wrong and I don't have that. What I do have though is -- we made mistakes in our business which I think any business does and we made some poor business decisions in hindsight," he said.

Levin later shot back: "You got no regrets? You ought to have plenty of regrets. I don't think you're willing to acknowledge them but you oughta have them. I don't think you will acknowledge them, that's why we have to do some regulation."

Levin later shot back: "You got no regrets? You ought to have plenty of regrets. I don't think you're willing to acknowledge them but you oughta have them. I don't think you will acknowledge them, that's why we have to do some regulation."

'Fabulous Fab' Tourre Asserts Innocence

Speaking publicly for the first time since the SEC charges were announced, Tourre asserted his innocence, insisting repeatedly to a Senate panel that he didn't mislead clients in a controversial mortgage derivative product the SEC claims was designed to fail. The SEC alleges that Goldman and Tourre failed to disclose to investors that hedge fund Paulson & Co. bet against the product after helping choose the mortgages that it was tied to.

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

Asked about internal Goldman e-mails that reveal Tourre joking about selling bonds to "widows and orphans that I ran into at the airport" in Belgium, Tourre said, "I regret these e-mails. They reflect very bad on the firm and on myself and I think, you know, I wish I hadn't sent those."

A fiery Sen. Claire McCaskill said the Wall Street firm was simply gambling with the securities known as synthetic collateralized-debt obligations.

"It's gambling pure and simple," she said. "Raw gambling. They're called synthetic because there's nothing there."

"You think it's so complicated and you think you're so smart – any street gambler would never place a bet with a bookie or a house with the record that is revealed in the documents this committee has gathered," she said.

However, critics say the blame may not only lie with Wall Street, but with Congress and the government itself -- it was Washington that scaled back its oversight of Wall Street for decades and decades.

As McCaskill said to the Goldman executives, "You had less oversight than a pit boss in Las Vegas."

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