According to a report commissioned by the New York Federal Reserve in 2009, the Fed's culture for lax supervision was to blame for the financial crisis in 2008.
Even though some of the Fed's supervisory staff offices were located in the offices of major banks, individually, they lacked the initiative to take actions on things they saw, the report read. The Fed's culture also did not encourage such action.
“Examiners note how important it is to receive support from senior management when the banks complain about supervisory intrusion, and how demoralizing it can be when they perceive insufficient support,” the report's authors wrote.
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