Goldman Sachs is at the Heart of this Mess

It's not just Goldman, it's a systemic thing, but their role in the collapse of AIG:

Goldman Sachs Group Inc. and Societe Generale SA extracted about $11.4 billion from American International Group Inc. before the insurer’s collapse as the firms demanded to hold cash against losses on mortgage-linked securities, according to regulatory filings.

The problem with credit default swaps is that unlike short selling, which only effects a share price (though naked shorts should be banned, and the ban enforced), credit default swaps (CDS) can have the effect of bankrupting a company in a matter of hours, and frequently the holders of these securities have no interest in the survival of the underlying assets.