The issue is that banks play various roles depending on the type of banking. In some roles they are basically salesmen and you aren't supposed to put much trust

The issue is that banks play various roles depending on the type of banking. In some roles they are basically salesmen and you aren't supposed to put much trust in them. In those roles, they are just supposed to not defraud the customers. Like you can get Goldman to create a product that hedges against oil prices going up. Goldman isn't fucking you over just because they think oil isn't going up. They are almost adverse to their customers. In other roles, they are directly advising the client. In those cases they have fiduciary duties to the client. They can't just sell you crap. They have to do their best. The real problem is there is a whole lot of inbetween roles. Where they are quasi salesmen and quasi advisors. Like in this case, Goldman is acting like a salesmen but is making some quality claims about how much diligence they did. Also, I think in the abstract that knowingly selling toxic assets would destroy a banks reputation, but the fact that everyone got caught in the sub-prime mess lessened the impact.