...records all its derivatives at fair, or market, values as per accounting rules. In the models it uses to derive this fair value, the company says it looks to the performance of the underlying assets, expected losses, credit ratings and interest rates as well as what's happening in the market...
Small point: Fair value, and market value, are not synonymous.
But, the very idea that AIG (AIG) might fiddle the books for fun and profit? Where could that come from? Oh. There. Taking a Greenberg out of the company was one thing; taking the Greenberg out of a company, something else entirely.
In Subprime, AIG Sees Small Risk; Others See More
by David Reilly
The Wall Street Journal Aug. 13 2007