"It wasn't quick enough," O'Loughlin told Stan Grant during an interview on The Point.
"I think our governing body of this great game needed to react really quickly to support Adam in what he was going through."
In the AFL's 2015 Annual Report, released last week, CEO Gillon McLachlan said the AFL had failed Goodes.
"By the time Adam retired, he had been subject to a level of crowd booing and behaviour that none of our players should ever face," McLachlan wrote.
"As a game, we should have acted sooner and I am sorry we acted too slowly."
In July 2015, McLachlan had said that the AFL could "not tell supporters how to behave", after Adam Goodes took extended leave from the Swans following weeks of incessant booing.
O'Loughlin says he witnessed the booing while attending a match with his son.
"I remember watching the game with my young son and he asked 'why is everyone booing Uncle Adam?'
"That was really hard to explain to an eight-year-old."
Now head coach at the Sydney Swans Academy, O'Loughlin says emerging Indigenous players look to Goodes for inspiration.
"Racism is going to be one of those hurdles... one of those things they need to deal with," he says.
"And how do they deal with it? They look at their heroes, and obviously none better than Adam Goodes."