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(Reuters) - The Federal Reserve is inconsistent in the way it monitors big banks and that lack of consistency could make it difficult to identify emerging risks across banks, according to a study by auditors at the U.S. central bank released on Monday.
Each of the 12 regional Federal Reserve Banks nationwide had different guidance for how they continuously monitored large financial institutions, the study from the Office of the Inspector General found.
In fact, monitoring standards could vary from bank examiner to bank examiner within the same team, the study said, warning on how that could make it difficult to identify emerging risks.
The report found that Fed examiners sometimes struggled with "voluminous documentation" connected with the monitoring, and struggled to review all the information in a timely fashion.
While extensive data collection was necessary during the financial crisis that began in 2008, the study questioned whether the same volume is needed now that banks are on more solid footing.
Examiners said they were reluctant to reduce requests for documents and meetings for fear of missing important information. Melissa Heist, the associate inspector general for audits and evaluations at the Fed, sent the report to the central bank's Board of Governors.
The inspector general also found that when documents were stored within the Fed, they were not efficiently organized, making it difficult for Fed examiners across the system to easily find and organize information across banks.
The report suggested the Fed adopt a framework for managing monitoring documents and improve training and review of monitoring activities to ensure their effectiveness.
Michael Gibson, director of supervision and regulation at the Fed Board of Governors, said in a March 21 letter to Mark Bialek, the Fed's inspector general, that work was underway to address the specific recommendations.
Reporting by Pete Schroeder; Editing by Leslie Adler