For a while, it looked like brokerage giant Goldman Sachs (NYSE: GS) had sidestepped the oncoming freight train of credit losses. In fact, it had been given a lot of credit for aggressively shorting some of the areas that were causing heartburn for competitors like Lehman Brothers (NYSE: LEH), Bear Stearns (NYSE: BSC), and Citigroup (NYSE: C).

But it looks like it wasn't to be. According to websites DealBreaker and Bloomberg, variable interest entities (VIEs) -- which allow financial companies to keep some assets off their balance sheets -- could be the next jumble of letters to spark billions of dollars of losses in the financial sector. They are saying losses from VIEs could amount to as much as $88 billion, with $11 billion of that coming from our friend Goldman. Putting this in context, Goldman's total 2007 profit was $11.6 billion -- so its VIE losses could make 2008 what they call in pro sports a "rebuilding year," to say the least.

It was shocking and not so shocking to me all at once. On the one hand, there was part of me that thought Goldman would be able to navigate through this mess with just some nicks and scratches. After all, it was shorting the heck out of some of the markets that were falling the fastest and was making money where others were losing big. The company is still among Fortune's most admirable companies, and one of its bankers even merited a shout-out from Warren Buffett (who's no big fan of Wall Street) in this year's Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) shareholders' letter.

But at the same time, the whole thing just seemed a little bit impossible. Goldman was making money in much the same way as its competitors during the housing market bubble, so it would seem to follow that it would have to have exposure somewhere. The big question now is how bad it will be -- and we should get some color on that March 18, when the company reports earnings.

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Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. The Fool's disclosure policy has never once been caught with its pants down. Of course, it doesn't actually wear pants.