WASHINGTON - Wall Street and Washington clashed yesterday as Goldman Sachs executives denied charges by a Senate subcommittee that they bet against the interests of their clients to make billions of dollars during the housing crash.

Executives of the giant Wall Street investment company also rejected charges in a complaint filed against them by the Securities and Exchange Commission recently that it mislead and withheld information from investors.

"I deny - categorically - the SEC's allegations," said Fabrice Tourre, who the SEC named in its complaint and who works in the company's London office. "And I will defend myself in court against this false claim."

And the four former and current Goldman officials testifying yesterday morning also denied they were to blame for the economic crisis, though they expressed regret that it happened.

"We did not cause the financial crisis," said Michael Swenson, a Goldman Sachs managing director. "I do not think we did anything wrong."

But those assertions sparked skepticism and hard questions by both Democratic and GOP senators in Tuesday morning's hearing in a packed marble and wood-paneled hearing room. Sen. Carl Levin (D-Mich.) said they contributed to the Wall Street culture of greed, and Sen. John McCain (R-Ariz.) said, "There is no doubt their behavior was unethical."

The hearing, which appears to be leading to a daylong grilling, is being held by the Senate Subcommittee on Permanent Investigations amid a partisan battle on the Senate floor over the Democrats' legislation to tighten rules on Wall Street.

Levin wielded two telephone-book thick compilations of internal Goldman e-mails and documents to try to show that the company sought to sell securities of bundled high-risk mortgages, which e-mails described as "crap" and ""--," while betting those securities would fail.

"The evidence shows that Goldman repeatedly put its own interests and profits ahead of the interests of its clients and our communities," Levin said. "And when the system finally collapsed under the weight of those toxic mortgages, Goldman profited from the collapse."

Goldman chief executive Lloyd Blankfein said in written testimony, "We didn't have a massive short against the housing market and we certainly did not bet against our clients."

He said the company had lost $1.2 billion from housing market investments, but did not say how much Goldman Sachs made from its short positions in that market.

"While we strongly disagree with the SEC's complaint, I also recognize how such a complicated transaction may look to many people," Blankfein said. "To them, it is confirmation of how out of control they believe Wall Street has become."

In an early exchange that set the tone for the hearing, Levin pressed former Goldman partner Daniel Sparks on whether he had an obligation to tell a potential investor in a risky mortgage-backed security that his company was betting against it by taking a short position on it.

Levin cited an internal e-mail showing a customer asked Goldman how they could be comfortable with a risky lender's mortgages that were bundled into securities.

"When asked how can you be selling this security, how can you get comfortable," Levin asked, "was there an obligation to answer that direct question, 'Hey, we're going short and staying short'?'"

Sparks responded that "anyone buying should look at assets themselves."

Pressed again, Sparks said he didn't understand the question or asked if it were a legal question.

Finally exasperated, Levin said, "You're not going to answer the question, it's obvious."

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