Smoking Gun?
Here is an article from yesterday's New York Times about the involvement of Goldman Sach's senior management in decisions relating to the mortgage market.  I don't see a smoking gun here, I read just the opposite, that Goldman's senior management was actively engaged in what the firm's mortgage traders were doing.  This is the type of engagement that shareholders should expect from top management, especially in a line of business that had seen dramatic growth in a relatively short period of time.  It's the type of engagement that taxpayers would have liked to have seen at AIG, as a once small division (Financial Products) became huge in very short time writing un-reserved insurance policies against newly created securities that never been exposed to a full market cycle.

The article details Goldman Sach's internal debate over the housing market and how the bears prevailed in late 2006.  This was before the early-2007 collapse of the two Bear Stearns' funds that started the subprime mortgage implosion.  Goldman made a lot of money when the crap mortgage securities began to decline in value.  Here is a long quote from the article:

Goldman’s top ranks changed its stance on housing in December 2006. In a meeting in a windowless conference room on the executive floor, Mr. Viniar, the chief financial officer, and Mr. Cohn, the president, gathered about 10 executives for a briefing. Mr. Sparks, the head of the mortgage unit, walked them through the numbers. The group was unanimous: Goldman had to reduce its exposure to the increasingly troubled mortgage market

A few months later, in February 2007, senior executives began turning up on the trading floor. The message, one former employee said, was clear: management was watching.

“They basically said, ‘What does this department do? Tell us everything about mortgages,’ ” this person said.
The executives told Mr. Sparks to tell his traders to sell Goldman’s positive bets on housing. The traders’ short positions — that is, negative bets, mostly used to hedge other investments — were placed in a central trading account.

Not everyone was happy about it. One trader leaving the firm wrote the mortgage unit a one-word e-mail message: “goodbye.”

Goldman turned over all these negative positions to Mr. Swenson and Mr. Birnbaum, the traders who had previously been positive on the market. Along with Mr. Sparks, they have been credited for managing the short position that yielded a $4 billion profit for Goldman in 2007. Mr. Sparks retired in 2008. Mr. Birnbaum also left in 2008, to start his own hedge fund.

But former Goldman employees said those traders benefited from the short positions that were given to them. And their trading was tightly overseen by senior executives.

At one point in the summer of 2007, for instance, Mr. Birnbaum made a case to Mr. Cohn that some mortgage assets were cheap and that Goldman should let him add $10 billion in positive bets. Mr. Cohn said no.