American International Group Inc., the bailed-out insurance company, says it’s poised to emerge as a “financially strong, independent company” once it repays the U.S. government. That claim might be more credible if AIG started showing a truer picture of its financial condition.
The choice belongs to AIG and, ultimately, the Treasury Department. Two years ago when the government seized control of AIG, the Treasury in effect took a 79.9 percent ownership stake in the company, through preferred shares and warrants it received as part of AIG’s $182 billion bailout package. By keeping its stake below 80 percent, the government ensured that a financial-reporting method known as push-down accounting wouldn’t be permitted under U.S. accounting rules.