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Correct me if I'm wrong, but towards the end of the bubble (2008) GS had insured (bet against) the CDOs that it had previously been propping up.

[1] https://www.huffingtonpost.com/david-fiderer/the-cdos-that-d...

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They had insurance on assets they held, sure. They bought the CDOs from some parties and sold (CDS on) them to other parties, like any middleman in any industry. A wash trade is something quite different: buying something from yourself, with no other parties involved in either transaction, to show a trade that manipulates the price.

There's nothing wrong with being in the middle of a line of trades. The crime is when that line becomes a loop and nothing is actually changing hands at either end.

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