By Ryan Tracy And Katy Burne 

The Federal Reserve said a yearlong review of its supervision of large banks showed the vast majority of its staff feel empowered to express opposing viewpoints, but it promised to establish a more formal process for airing those views.

The review was launched a year ago amid accusations that its internal culture stifled differing opinions among bank supervisors. The introspection is the latest response to criticism that the central bank is too close to the large financial firms it oversees.

The perception that the Fed is "captured" by big banks was prevalent after the 2008 financial crisis. It flared up again last fall after a former bank examiner at the Federal Reserve Bank of New York went public with recordings that she said showed her former bosses fired her when she wouldn't change a negative finding about Goldman Sachs Group Inc.

The Fed denied the claims by the former employee, Carmen Segarra, and in September, a U.S. appeals court affirmed a district court's earlier dismissal of Ms. Segarra's claims.

In the month after the publication of her recordings, the Fed's inspector general separately said the regulator missed a potential opportunity to prevent J.P. Morgan Chase & Co.'s "London whale" trading debacle in 2012, in which botched trades eventually cost the bank $6 billion.

The Fed launched its review in the days before a 2014 congressional hearing at which Senate Democrats blasted New York Fed President William Dudley for being too close to Wall Street. At the time, the New York Fed said it already had begun encouraging its examiners to be independent and to speak up when they have concerns. In the Senate hearing, Mr. Dudley said the New York Fed had made speaking up "a factor in their [staffers'] annual performance reviews."

The Fed also asked its inspector general for a separate review of how it handles "divergent views." That is slated to be finished in the first quarter of 2016.

The Fed's own review focused on supervisors at Federal Reserve Banks such as New York, who are the main staff members who interact with the big banks and carry out policy set in Washington. The Fed said the review was conducted by an independent group of officials drawn from both its Washington headquarters and the reserve banks.

The Fed said interviews were conducted with 122 current and former bank supervisors, and 95% of those interviewed "felt empowered to raise supervisory concerns and express divergent views."

However, reviewers found the reserve banks lacked a formal process for dealing with a situation in which a senior supervisor disagreed with a subordinate, and recommended the Fed establish a procedure that would allow the staffer to raise his or her concerns with staff in Washington. The report said that recommendation is a "high priority initiative" for 2016.

"The steps we are implementing will further strengthen our robust, multi-disciplinary approach to supervising the largest and most complex financial institutions," Michael Gibson, director of the Fed's Division of Banking Supervision and Regulation, said in a statement.

The review also said the Fed needed to improve in the way it trains supervisors and documents and tracks issues that they are probing--recommendations the Fed also said it would put into practice.

The New York Fed, which has front-line responsibility for carrying out supervision of large Wall Street banks, has embarked on a series of changes since commissioning a 2009 review by Columbia University professor David Beim that appeared to show a culture that discouraged staffers from voicing divergent opinions about the banks they supervised. Mr. Beim declined to comment.

The New York Fed recently began relocating certain teams of on-site bank examiners back to a revamped space at its downtown Manhattan headquarters, according to people familiar with the matter. The new space has been created in part to encourage more frequent and open exchanges of views, the people said.

Earlier this month, the regulator hosted an event on banking culture, at which participants addressed the importance of individual accountability. New York Fed President Dudley told the attendees that the challenges in reforming institutional culture "apply to the regulatory community as well."

Write to Ryan Tracy at ryan.tracy@wsj.com and Katy Burne at katy.burne@wsj.com

(END) Dow Jones Newswires

November 24, 2015 18:36 ET (23:36 GMT)