According to the Washington Post:
Goldman admits it had reduced its exposure to the overheated U.S. property market and had sought to limit possible losses through a strategy that would make money if home prices fell. It says such "hedging" is a routine part of its business and is intended to moderate risk to the firm, an especially vital function when markets shift violently, as they did in 2008.
The Post puts "hedging" in quotes like it is some fatuous excuse by Goldman. Let's see: Goldman is accused of betting against the housing market (that housing prices would fall). It also had other bets that housing prices would rise. It is prudent to not bet the whole firm one way or the other on something so uncertain as housing prices. Having bets on both sides is called "hedging" and is Finance 101. Goldman Sachs is on the hook for a lot of possible sins, of which it may be indeed guilty. Hedging is not one of them. That the media and politicians can't even understand hedging is not reassuring when the largest financial reform in a generation is underway.