Are Goldman’s profits defensible?

In their eight-page letter to shareholders this year, Goldman Sachs Chief Executive Lloyd Blankfein and President Gary Cohn defended their firm, insisting that its record-smashing profits of $13.4 billion were the result of hard work and smart bets. They described the firm’s $13 billion exposure to American International Group Inc. as minimal and the $16 billion shelled out to employees as appropriate.