The early questioning in the Senate's hearing on Goldman Sachs centered on the following question: do broker-dealers have a fiduciary duty to act in the best interest of their clients? Both Senators Carl Levin (D-MI) and Susan Collins (R-ME) wanted an answer to this question. They didn't really get what they wanted. It's unclear why, however, because the bankers testifying certainly could have appropriately answered the question.
That answer is related to a post from yesterday, which explained a banker's fiduciary duty. The answer is yes and no, depending on what you mean by "best interests." As a market maker, an investment bank does have a duty to act in the best interest of their clients, but not the way the Senators are looking for. They think Goldman should have informed its clients of its world view of how the market might perform in the future.
Market makers need to provide clients with fair market pricing along with full and accurate information about the securities that they're selling. Goldman was not acting as an investment advisor in the examples the Senators used. As a result its bankers should not have provided clients with their opinions on the future performance of those securities.