As per the report, the Fed’s existing system used to monitor large banks is insufficient to timely detect a financial crisis in the making.

A study by auditors of the Federal Reserve has found inconsistencies in the way the central bank monitors big banks. Their report also state that its lack of consistency is likely to make it difficult for it to identify emerging risks across banks.

The study by the Office of the Inspector General found that each of the twelve regional Federal Reserve Banks nationwide had different system for continuously monitoring large financial institutions.

Moreover, the study also found that monitoring standards could vary from bank examiner to bank examiner within the same team. This is one of the reasons as to why it would be difficult to identify emerging risks. Reads the report.

It also found that Fed examiners sometimes struggled with “voluminous documentation” connected with the monitoring. They also struggled to review all of the information in a timely manner.

Although extensive data collection was required in the 2008 financial crisis, the study questioned the requirement of the same now that banks are more on a solid footing.

The inspector general’s report also found discrepancies in the way the fed organises its internal documents. As per its reports, the inefficiency in its document organisation could make it difficult for Fed examiners across the system, to easily find and organize information across banks.

The report has suggested that the Fed adopt a new framework for managing and monitoring its documents as well as improving its training, reviewing and monitoring activities to ensure better effectiveness.

Michael Gibson, the director of supervision and regulation at the Fed Board of Governors, has replied to the inspector general’s report in a letter dated March 21 stating that work is underway to address the specific recommendations.