A series of Goldman Sachs executives, chairman and CEO Lloyd Blankfein included, were called to Washington this Tuesday to testify before the United States Senate. The firm is front and center in the Democrats’ quest for Wall Street reform, such as preventing banks from becoming “too big to fail” lest taxpayers once again be called upon to bail out failing financial corporations.

In the wake of fraud charges that the Securities and Exchange Commission levied against Goldman, proposals to overhaul financial regulation have intensified. Lawmakers want to force Wall Street banks to give up complex financial trades called derivatives or lose access to emergency government loans. Goldman came under fresh pressure this morning when it was revealed that it also faces a criminal investigation into mortgage security deals it arranged.

Blankfein assured the Senate investigative committee on Tuesday that his firm was not to blame for causing or contributing to the financial meltdown of 2008. Goldman, in fact, was one of the few major institutions on Wall Street that didn’t get into trouble and, according to Blankfein, it didn’t reallly need the multibillion dollar TARP funds made available under the last administration. He faced withering criticism from senators skeptical that Goldman played fair in its transactions though. As Ted Kaufman of Delaware noted: “You came out of this thing fine.” Surely, that meant Goldman hadn’t played by the rules somehow?

In the court of public opinion, Goldman faces three different charges. First is that it was supposedly unkind to its institutional counterparties who bought securities that it helped arrange and which plummeted in value when house prices dropped. Secondly, Goldman is blamed for helping clients on the other side of the trade profit from those failling house prices. There is crime is neither however.

As the Goldman executives made clear throughout the committee’s marathon session, the firm was not obliged to make wholesale disclosures to clients about the risks of certain investments. “I don’t believe there’s a disclosure obligation,” said Blankfein, arguing that there are buyers and sellers with different opinions in every transaction in finance, even buying a common stock.

Goldman basically started to bet against the housing market in early 2007 when it realized that many of the subprime mortgages thrust into the system, with help from the government, were unsustainable. If that, by some leap of imaginations, renders them responsible for the 2008 collapse, at the very least the people who puffed up the market have as much to answer for as Goldman.

It is the third accusation that matters. The SEC alleges that Goldman misled two of its clients by failing to provide adequate disclosure. Urged by hedge fund Paulson, the company enlisted insurer ACA to select, with Paulson’s input, a pool of mortgage instruments upon which the security’s price would be based. Goldman is supposed to have misled ACA into believing that Paulson would also invest while in fact, the hedge fund was betting that the security would decline in value.

The SEC further suspects that Goldman failed to inform the German bank IKB that Paulson had been involved in picking the aforementioned mortgages.

Goldman denies the first allegation outright and argues, on the second, that Paulson’s role was not material. The evidence, though slim, seems to indicate otherwise. In the end, the outcome won’t matter much though. Goldman is already regarded as guilty by many, including lawmakers. This perfectly fits the familiar narrative in which banks caused the crisis, manipulated the bailouts and profited from everyone else’s misery.

The senators on the investigative panel were only too happy to perpetuate the myth with Chairman Carl Levin, a Democrat from Michigan, leading the charge. He repeatedly described Goldman investments as “shitty”, blasted the firm’s “unbridled greed” and blamed it for not serving any “social purpose.” At one point, Levin even suggested that Blankfein should feel ashamed for accepting “government money,” referring, not to TARP, but to $2.5 billion which insurer AIG owed Goldman. AIG used part of its bailout to repay Goldman and apparently, that was Goldman’s fault.

For his part, Blankfein expressed support for Wall Street reform. “We don’t think we’re too big to fail,” he said. “We don’t want to be too big to fail.”