Keith Stein started out as a good man but too in love with money and capitalism. He always wanted to be a somebody with women hanging off of him. He was romanticized into the Private Investigator life after reading too many dime novels. However, on his first try, he scored big with a wealthy aristocrat looking for dirt on her husband. This scored him enough funds to get a proper office and invest the rest. Keith became an instant "Golden Boy" as his high risk investments took off. This allowed him to fill his office with beautiful assistants and take on more high profile cases.
One case in particular, involved doing some investigating into the Unlimited Class Wrestling Federation. He had taken the case from other professional wrestling organizations who were losing ratings and status to these super powered newcomers. They wanted to know of illegal substances or anything that would allow them to file a class action suit. This was a case he couldn't refuse. He stood to make a million or more from his cut of the legal suit and it gave him a macho thrill to go up against super powered goons. Stein's investigations led him to the western headquarters of the Power Broker who was supplying normal humans with a serum to augment their various abilities. Bravado only goes so far. Stein was captured and beaten. He was thrown in a cell until he could be interrogated and executed. Stein escaped his cell due to his knowledge of security systems but got cornered in the lab. He saw the augmentation serum on the table and injected himself with it. His combat training plus his augmented physique allowed him to escape. Dr Malus knew that one day the serum would drive Keith over the edge so he pursued him no further. Keith, not wanting people to know of his new abilities so he dropped the case and told his clients he couldn't find any proof.
Seeing crime activities increasing in SF, Keith thought it would be a kick to go out and bust some goons. He chose an American motif as a costume because he saw it as THE symbol for capitalism. He wouldn't wear anything prissy like Captain America's uniform so he created a black costume that would allow him the stealth he needed at night. He would be the everyman people could look to, not some has-been 1940 soldier. He would be THE American. Already the serum was poisoning his mind.
After fighting a few crimes in SF, he was enlisted by Raven to join a covert group, the Dark Force, working for the government under the leadership of Val Cooper. This was an opportunity Keith couldn't refuse: a chance to keep the shores of capitalism safe and he got to work for a babe like Cooper. After Chaos' breakdown, American returned to SF but became increasingly neurotic. Phantasm appeared to him with a proposal to help dominate another dimension with much weaker superheroes and help create an American / Japanese capitalistic empire. American jumped at it and plunged fully to the dark side. His whereabouts are unknown upon his return from the other Earth.