U.S. Wall Street giant Goldman and Sachs executives on Tuesday challenged the government's fraud allegations against the company and defended the company's role in the housing market.

"We strongly disagree with the SEC's complaint," said Lloyd, Blankfein, CEO of Goldman in a written testimony before the Senate Permanent Subcommittee on Investigations.

He was one of seven Goldman officials to appear before the Senate penal in its probe into the Securities and Exchange Commission (SEC) civil fraud case against the giant investment house.

Ten days ago, the SEC announced a civil action against the country's most profitable financial firm in connection with a specific transaction, in which Goldman was accused to use a strategy that allowed it to profit from the housing meltdown and reap billions at the expense of clients.

"We didn't have a massive short against the housing market and we certainly did not bet against our clients. Rather, we believe that we managed our risk as our shareholders and our regulators would expect," Blankfein said.

He said that during the two years of the financial crisis, while profitable overall, Goldman Sachs lost approximately 1.2 billion dollars from its activities in the residential housing market.

"We have been a client-centered firm for 140 years and if our clients believe that we don't deserve their trust, we cannot survive," Blankfein said.

But many lawmakers believe that Goldman is one of the Wall Street investment banks which played a key role that led to the financial crisis.

"I hope the executives before us today, and their colleagues on Wall Street, will recognize the harm that their actions have caused to so many of their fellow citizens," Senator Carl Levin, chairman of the Permanent Subcommittee on Investigations, said at the hearing.

The hearing comes as the Senate grapples with Democratic- sponsored legislation to overhaul the nation's financial regulation system. Republicans on Monday blocked the Senate from taking up the measures in a test vote, but Democrats are vowing to try again.