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Is what Goldman Sachs did nothing but gambling?

Lawmakers at the Goldman Sachs hearing repeatedly compared the activities of investment banks to gambling. But that's not how Goldman officials view it. Here's how both sides argue the issue.

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Goldman Sachs chairman and chief executive officer Lloyd Blankfein testifies before the Senate Subcommittee on Investigations hearing on Wall Street investment banks on Capitol Hill Tuesday.

Susan Walsh/AP

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Is Goldman Sachs CEO Lloyd Blankfein a bookie?

That sounds harsh, but on Tuesday, senators repeatedly compared the activities of investment banks to gambling as they grilled Mr. Blankfein and other Goldman Sachs officials about short selling, synthetic collateralized debt obligations, and other arcane Wall Street arts.

Things went so far that eventually Sen. John Ensign (R) of Nevada, whose constituents include Las Vegas casinos, took umbrage. He said that his state’s version of gambling is fairer than what happens in the trading rooms of Manhattan.

In Vegas, the croupiers do not change the odds on a game while it is in progress. But on Wall Street, bankers are “tweaking the odds in their favor” while deals progress, said Senator Ensign.

Eventually, Blankfein had enough. He objected to the continual use of the word “bet” by subcommittee chairman Sen. Carl Levin (D) of Michigan to describe short selling, an activity in which profit stems from a decline in asset price.

“You know, we live in different contexts,” Blankfein said to Senator Levin.

They do, indeed. Here’s a summary of how both sides view this question:

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