Atlanta, located in the heart of the South, was a center of the civil rights movement, became a corporate hub of the New South economy, and boasts a large black professional class.

Can it help break the Federal Reserve's color barrier?

Dennis Lockhart's retirement early next year as head of the Federal Reserve Bank of Atlanta has spotlighted the selection of his replacement as members of Congress and a coalition of activist groups call for an aggressive search among blacks and Latinos with finance or economics expertise.

African-Americans have served on the Federal Reserve's Washington-based Board of Governors three times in the Fed's 103-year history, and the central bank now has a female chair, Janet Yellen.

But none of the regional banks have ever been run by a black or Latino, a lack of diversity some argue is worrisome on its face and could make the system as a whole less attentive to how policy impacts less advantaged communities.

"Grave racial disparities exist across our nation in unemployment, wages and income. ... It is critical that incoming leadership ... be committed to doing more," four African-American members of the House of Representatives wrote in a letter this week to Yellen and Thomas Fanning, chair of the Atlanta Fed's private board of directors.

"Lockhart's recent retirement announcement presents an opportunity to enhance and expand the Federal Reserve's leadership," they said in the letter.

In a public webcast on Thursday, Fanning said he wants to hold "one of the most transparent processes ever," and that the search committee has already received nominations from the public at large.

As in other districts, the search will be national in scope. There is no requirement that the head of the Atlanta Fed come from the bank's southeastern region, and the 12 regional Fed banks often bring in a president from outside their own geographic area.

Executive search firm SpencerStuart has been hired to run the search. Consultant John Harpole said the firm has helped place 1,600 women, minorities and other "underrepresented groups" in corporate positions, and would cast a wide net among local institutions, national organizations and its "strong network" of sitting executives to find candidates.

The issue is sensitive for the Fed, whose policies affect every citizen but which is designed to be immune from the day-to-day politics that influence other U.S. government agencies.

Group says Fed is unaccountable 

Because monetary policy focuses on influencing interest rates that apply nationwide, Fed officials say it is too blunt a tool to address issues like the persistent gap between unemployment rates for blacks and white.

Activists counter that those sorts of problems might improve if unemployment was driven as low as possible — even at the risk of higher inflation. The Fed sets policy with two goals in mind, low employment and stable inflation of around 2 percent annually.

The U.S. unemployment rate in August, the latest month for which data is available, was 4.9 percent.

A labor-affiliated coalition of civic groups, known as Fed Up, has taken the argument even further, arguing that the Fed's very structure makes it unaccountable.

The regional banks in particular have supervisory power over local financial institutions as well as a voice in national policymaking, but are set up as private entities owned by the banks they oversee. The regional bank presidents are chosen by a local board of directors, though the choice must be approved by the Fed governors in Washington.

In a meeting with civic activists in August, New York Fed President William Dudley agreed the institution had done a "pretty lousy" job of promoting diversity. But Fed officials in general argue that the current structure has worked well, and that changes would need to offer clear advantages without risking the central bank's independence.

In that environment, the Atlanta Fed appointment will be watched closely. Though many regional bank heads come from within the broader Fed system, tapped from its ready pool of economists with doctoral degrees, Lockhart had a varied career in private equity and banking before taking over the Atlanta Fed 10 years ago.

And while the search will be national, Atlanta has a deep pool of black professionals - 10 percent of African-Americans in the city have a graduate or professional degree, three percentage points higher than the national average.

"That would be a great thing," Fanning said. "We want the best person as well."

By Howard Schneider

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