A method for preventing damage in a bearing of a generator includes monitoring, via a controller, one or more electrical signals of the power conversion assembly. The method also includes converting the electricals signal(s) to a frequency domain. Further, the method includes extracting one or more spectral components in frequency bands of the frequency domain around one or more known characteristic frequencies of the bearing. Moreover, the method includes determining at least one characteristic of the spectral component(s) in the frequency bands. In addition, the method includes comparing the characteristic(s) of the spectral component(s) in the frequency bands to at least one baseline value. The method further includes generating a fault signal or a baseline signal for the bearing based on the comparison. In response to the fault signal being generated, the method includes implementing a control action.