The Federal Reserve failed to adequately address conflicts of interest or the reasons behind its actions when the central bank bailed out insurer American International Group (AIG) in the wake of the 2008 financial crisis, the Government Accountability Office said Tuesday. The GAO analyzed numerous AIG documents from the Fed and interviewed officials from the Fed and the Federal Reserve Bank of New York, as well as AIG executives, credit rating agencies and other parties. The financial deterioration of the insurer in 2008, prompted the Fed and the Treasury Department to authorize the injection of $182.3 billion into AIG. “While the Federal Reserve board exercised broad emergency lending authority to assist AIG, it was not required to, nor did it, fully document its interpretation of its authority or the basis of its decisions,” according to the GAO report. The government study goes on to say the handling of the deal led to the development of complex relationships and conflicts of interest that may expose the New York Fed “to greater risk that it would not fully identify and appropriately manage conflict of issues and relationships.” The GAO says after studying the AIG bailout, Federal Reserve officials should focus on finding ways to identify private sector solutions to crisis situations sooner to ease stress. In addition, the investigative arm on Congress said information should be compiled in advance before making major moves and stress tests should focus foremost on the interconnectedness of institutions to evaluate their impact on the entire financial system. Write to Kerri Panchuk.