goldmanAs part of its annual report for 2009, Goldman Sachs — the most powerful and profitable bank on Wall Street — included an eight-page letter to its shareholders that denied the many claims of mismanagement leveled at the company while thanking the federal government for its "indispensable role" in benefiting its shareholders.


"Goldman Sachs is grateful for the indispensable role governments played and we recognize that our firm and our shareholders benefited from it," the letter stated.

The company had a terrific year in 2009 because of frequent government intervention, but refused to acknowledge responsibility for the crisis that led to an economic meltdown.

Foremost among its denials was the company's vigorous defense of mortgage derivatives trading. In other words, Goldman Sachs never "bet against" its clients, according to the letter, which also stated that the company did nothing wrong with respect to AIG, took steps to limit compensation for its top executives, and "embraced new realities pertaining to regulation."

"Our short positions were not a 'bet against our clients,'" Goldman Sachs said in the letter. "Rather, they served to offset our long positions. Our goal was, and is, to be in a position to make markets for our clients while managing our risk within prescribed limits."

Goldman Sachs is one of several banks bailed out by the federal government that are using the reporting season to try to repair their battered image.

In a line of questioning during hearings this year, Phil Angelides, the chairman of the Financial Crisis Inquiry Commission criticized Goldman Sachs' banking practices, describing its chief executive Lloyd Blankfein as a "used car salesman."

Many critics share Angelides opinion of the bank's practices. Author Yves Smith called the letter "utter canard" when the bank claimed it had protected itself against the possibility that AIG couldn't make good on its obligations and therefore didn't need the government's help. The most recent cover story of BusinessWeek carries the headline "Goldman Sachs: Don't Blame Us."

In the letter, Goldman Sachs pledges to commit itself to "the process of reform," but according to an article in Barron's, the bank's lobbyists tell a different story.

Sifma is also concerned with a section of the bill on derivatives because... [of] the fear... that it will restrict the use of unregulated derivatives by businesses like airlines and agricultural concerns.

Sifma also opposes Dodd's call for mandatory trading of all over-the-counter derivatives and swaps on exchanges.

The bank pays the Wall Street lobbying firm Securities Industry and Financial Markets Association (SIFMA) each year to represent its interests. Two weeks ago, SIFMA fought Sen. Chris Dodd's financial reform bill to keep the risky betting Goldman's letter claims it doesn't support.

As Salon.com put it:

Not to be too fine about it, SIFMA wants to keep derivatives regulation weak, and protect the right of its members to recklessly bet depositor funds for their own accounts. This is not what we call "embracing new realities." It's more like a cold shoulder, followed by a stiletto between the ribs.

Goldman Sachs emerged from the financial crisis as one of the nation's strongest banks. It earned a record $4.79 billion profit in the last three months of 2009 on strong trading of risky assets and gains in its investment banking division.

Goldman also filed its annual proxy statement on Wednesday. According to an Associated Press calculation of the compensation data in the filing, CEO Lloyd Blankfein received pay valued at $9.86 million for 2009, including a restricted stock bonus worth $9 million on the day it was granted, a $600,000 salary and $262,657 in other compensation and perks including car service and retirement benefits.

The Associated Press contributed to this report.