Goldman takes on critics in shareholder note

Goldman takes on critics in shareholder note The dominant Wall Street firm said it Diamond Core Bits Kitdid not intentionally "bet against" securities in the mortgage market during the financial crisis, dismissing suggestions that it unfairly made money by placing bets against its clients.

In the letter introducing its annual report, Goldman also defended its relationship with the bailed-out U.S. insurer American International Group Inc (AIG.N). Goldman was one of AIG's largest trading counterparties and received full payment on credit default swaps on which the insurer was a counterparty thanks to the government rescue.

The letter, signed by CEO Lloyd Blankfein and Gary Cohn, president and chief operating officer, also addressed criticism about overly generous pay. It marks Goldman's most thorough effort yet to rebut a rising chorus of criticism over the past year as the bank enjoyed a year of record profits after benefiting from various government programs and policies.

"As a market maker, we execute a variety of transactions with clients and other market participants... which may result in long or short risk exposures to thousands of different instruments at any given time," said the letter .

Goldman said it did not generate enormous net revenue or profit by betting against residential mortgage-related products.

However, following its decision to reduce its exposure to risky mortgage securities, the bank said it lost less money than it otherwise would have when the residential housing market began to deteriorate rapidly.

In January, Blankfein faced harsh questioning from the chairman of the Financial Crisis Inquiry Commission, who accused Goldman of knowingly creating shoddy subprime-backed Diamond Core Bits Kitsecurities for customers, and then betting they would default.