What are the odds of that?

Thursday, April 29, 2010 | 2:01 a.m.

During Tuesday’s Senate hearing into the causes of the financial crisis, Goldman Sachs’ notorious mortgage-backed financial investments were skewered by senators, who repeatedly referred to the firm’s actions in gambling terms. The word bet was used 54 times, bets 13, betting 83 and bettor three times. The word odds was uttered five times, some form of the word gamble was used 15 times, there were two references to casinos and seven mentions of Las Vegas.

Whew.

Among the most notable references:

Sen. Claire McCaskill, D-Mo., declared that Goldman Sachs “had less oversight than a pit boss in Las Vegas.”

Sen. John McCain, R-Ariz., wondered how the firm’s deals “differ from going out to Caesars Palace to the sports book and making a wager on the outcome of an athletic contest?”

Sen. Mark Pryor, D-Ark., said that “instead of Wall Street, it looks more like Las Vegas.” Sen. John Ensign, R-Nev., a member of the subcommittee holding the hearing, corrected Pryor, saying “most people in Las Vegas would object to having Wall Street compared to Las Vegas.”

Ensign’s right. In Las Vegas, people know the odds aren’t in their favor but, unlike on Wall Street, they are assured they’ll get a fair game.

In a news conference Tuesday, Senate Majority Leader Harry Reid said that if the financial market was regulated the way gaming is in Nevada, Wall Street firms “wouldn’t be able to do a lot of these games — in fact, they wouldn’t be able to do any of them.”

Reid noted that when he served as chairman of the Nevada Gaming Commission, “we did everything we could to make sure the rules for people to gamble were fair to the consumer.”

But that is not the way things work on Wall Street, as the Goldman Sachs case illustrates. The investment bank had no problem offering deals that employees described as “junk” or “a piece of crap” to their investors. The firm, after all, made money on the deals.

Goldman Sachs has been charged with fraud by the Securities and Exchange Commission for its handling of a mortgage-backed investment deal. The SEC says the firm let hedge-fund manager Paulson & Co. influence the investments Goldman Sachs offered without disclosing Paulson’s role to other investors. Paulson reportedly made $1 billion on the deal, and it’s no wonder why. In gambling circles, that’s politely called stacking the deck.

McCaskill summed it up well when she said, “any street gambler would never place a bet with a bookie or a house” like Goldman Sachs. Those are biting words that Wall Street should take to heart. Investors can’t trust Wall Street to play fair, and that’s the essence of why financial regulation needs to be reformed.