The Office of Thrift Supervision must improve its oversight of institutions operating over the Internet, according to a report by the Treasury Department's Office of Inspector General.

"Examinations of on-line and Internet banking were inconsistent and overly reliant on relatively few specialists," the report stated. "The OTS will need to better manage its work load, broaden its institutional expertise, focus its examination on the operational risks (e.g., liquidity and credit risks), and monitor the thrifts' Internet activities."

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