The New York Federal Reserve knew about risks J.P. Morgan faced from certain credit derivative exposure as early as 2008, but failed to act properly to head them off, the central bank's inspector general said on Tuesday.

The Fed's Office of Inspector General said one of the key flaws it uncovered in its probe of the so-called London Whale case was the New York Fed's over-reliance on certain personnel, who left the supervisory team in 2011. That created a "significant loss of institutional knowledge" within the New York Fed team assigned to inspecting J.P. Morgan, the report said.

The report also noted that competing supervisory priorities and limited resources contributed to the New York Fed's failure to conduct key follow-up examinations.

The London Whale case emerged from J.P. Morgan's (JPM.N) credit derivative trading losses in Europe in 2012, which were connected to its chief investment office (CIO) and ballooned to $6 billion by the end of that year.

Perhaps the most damaging finding was evidence that the New York Fed became aware of risks in J.P. Morgan's CIO four years before the scandal broke. According to the report, the New York Fed identified the risks and planned two examinations of the bank's CIO office.

A Federal Reserve system team also planned an examination in 2009, but the probes were not discussed with the Office of the Comptroller of the Currency (OCC).

"As a result, there was a missed opportunity for the consolidated supervisor and the primary supervisor to discuss risks related to the CIO and to consider how to deploy the agencies' collective resources most effectively," the report said.

The report said the New York Fed has responded by saying it is committed to improving supervision, and that it also has concerns about certain aspects of the inspector general's findings.

Because the concerns contain confidential supervisory information, the inspector general did not release them in its summary report.

The unabridged report is not publicly available.