Goldman Sachs Group Inc chief executive Lloyd Blankfein, in written testimony prepared for a Senate hearing on Tuesday, said his firm did not have a massive short against the housing market and certainly did not bet against our clients.

Goldman is accused by the U.S. Securities and Exchange Commission of defrauding investors by failing to say that a prominent hedge fund manager bet against a Goldman subprime debt product that he helped design.

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, said Blankfein, who along with other Goldman executives, is schedule to testify before the U.S. Senate's Permanent Subcommittee on Investigations on Tuesday.

Blankfein said that the SEC charges, filed April 16, was one of the worst days in my professional life.

In his testimony, Blankfein says that Goldman lost $1.2 billion from activities in the residential housing market during the two years of the financial crisis.

The fact is we were not consistently or significantly net 'short the market' in residential mortgage-related products in 2007 and 2008, Blankfein said. Our performance in our residential mortgage-related business confirms this.

Blankfein said Goldman, other banks, rating agencies and regulators failed to sound the alarm that there was too much lending and too much leverage in the system -- that credit had become too cheap

He also called for more transparency in derivative markets.

(Reporting by Steve Eder; editing by Carol Bishopric)

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