WASHINGTON (AFP) – Goldman Sachs bet on the demise of the US housing market as the economy teetered on the brink and as the firm sold mortgage-based investments to clients, company emails released on Saturday showed.

The embattled investment house, which is charged with fraud and misleading investors in the sale of complex mortgage-based financial products, bought and sold housing investments betting the market would fall, a process known as short selling.

“Of course we didn’t dodge the mortgage mess” chief executive Lloyd Blankfein told staff in a 2007 email released by the US Senate, “we lost money, then made more than we lost because of shorts.”

Blankfein, who guided Goldman through the financial crisis and a 10-billion-dollar government bailout, will testify before a Senate panel next Tuesday, facing angry questions from lawmakers about the firm’s role in the crisis.

As Congress discusses sweeping measures to reform the financial sector and place curbs on complex investment products, Goldman Sachs has been forced under the spotlight by the allegations from the Securities and Exchange Commission.

The US watchdog accused Goldman of allowing a prominent hedge fund to help put together a package of subprime mortgages that were sold to Goldman clients, but which the fund was at the same time betting against.

Britain’s financial regulator has also launched an investigation.

The company has vigorously denied any wrongdoing and has vowed to defend its reputation as Wall Street’s most stable finance house.

The storied Wall Street investment bank recently posted first quarter earnings of 3.46 billion dollars, up a whopping 91 percent against the same three months a year ago, blowing Wall Street expectations out of the water.