R.M. at DiA makes an excellent point:

It's important to distinguish between the SEC allegations and the allegations being aired in Congress, which I believe some senators are intentionally trying to confuse.

The SEC is alleging that Goldman broke the law in a very specific way. Binyamin Appelbaum of the New York Times explains, "Rather than asserting that Goldman misrepresented a product it was selling, the most commonly used grounds for securities fraud, the Securities and Exchange Commission said in a civil suit filed Friday that the investment bank misled customers about how that product was created. It is the rough equivalent of asserting that an antiques dealer lied about the provenance, but not the quality, of an old table." That type of misrepresentation or misleading is illegal, no doubt about it. On the other hand, the accusations emanating from Congressthat Goldman took the opposite side of its clients' bets on the housing marketare certainly not. As we say in our leader on the subject, "the idea of willing counterparties, with full and accurate disclosure, each seeking to profit from the other's inferior grasp, is central to financial markets."

James Surowiecki illustrated this idea yesterday:

No one on any side of this debate appreciates the casino analogy, but I think it’s still the most useful way to think about this question: when you place a bet on the Super Bowl, the casino is taking the other side of that bet. In many cases, it’ll balance the bets it makes on both sides of the trade, so that it’s exposed to no risk and it collects the certain profit from the spread. Regardless, though, any individual bettor knows that if he wins, the casino loses, and vice versa. That is, he knows the casino is on the other side of the trade. Levin seems to be saying that this means there’s a conflict of interest between the casino and the bettor, and that it’s illegitimate for the casino to take the bet. But there’s no conflict, because everyone knows what the deal is. And as long as the bet’s honest, and as long as the price is fair, the casino is doing right by the customer, because the customer is getting exactly what he wants: a chance to speculate. Now, we can argue about whether we want investment banks to be facilitating speculation (or investment, depending on your perspective), but as long as that’s legal, it’s hard to see why it’s unethical to make those trades possible.

Yglesias picks up the metaphor and runs with it.

We want to hear what you think about this article. Submit a letter to the editor or write to letters@theatlantic.com.