Daly appointment shows diversity gap between regional Feds

WASHINGTON, Sept 14 (Reuters) - The appointment of Mary Daly as the second-ever woman to head up the San Francisco Federal Reserve makes plain that some regional central banks continue to make strides in creating a diverse leadership as criticism intensifies about the Fed's hiring policies while others fall behind.

Daly, an economist within the San Francisco Fed for more than 20 years, will take up her post on Oct. 1, the bank said on Friday.

She succeeds John Williams who moved to head up the powerful New York Fed in June, an appointment that caused outcry from politicians and activist groups due to the bank's decision to select a white man and long-time Fed insider despite an "exhaustive and inclusive" search of diverse candidates.

A high-school dropout who was living on her own at age 16, Daly will add a distinctive perspective to a group dominated by men who set interest rates for the world's largest economy.

While the ranks of minorities and women have been growing across the Fed, even with the addition of Daly it still means only two of the central bank's 15 current policymakers are non-white and all but four are men.

Until Friday all but six of the roughly 135 regional bank presidents in the Fed's history have been men. Half of the 12 regional banks still have never selected a leader who is not a white male.

Philadelphia, Richmond and Dallas have all appointed new presidents in the last three years.

The Fed policy-making body includes the 12 regional banks plus members of the Washington-based Fed board, which currently has three members, one of whom is a woman. With the Senate last month having confirmed Richard Clarida to be vice chair, it means that the three most powerful positions at the Fed will be held by white men.

In 2016, 127 lawmakers wrote a letter to the central bank urging more varied faces among its ranks in order to "reflect and represent the interests of our diverse country."

The 104-year-old central bank had never had a black district president until last year, when Raphael Bostic was chosen to head up the Atlanta Fed, while previous Fed Chair Janet Yellen was the first woman to lead the Fed in its history.

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Yellen also broke the mould at the San Francisco Fed, becoming the first woman appointed its leader in 2004. Daly, who was mentored by Yellen, has a strong track record within the bank where she has risen to executive vice president and director of research.

Two other regional Fed banks have also made strides in increasing diversity.

The Cleveland Federal Reserve has appointed half of the six women ever to hold a regional presidency, while the Minneapolis Fed has had two non-white leaders.

Both Daly and Bostic are also the first two openly gay regional bank presidents in the Fed's history.

The need for diverse voices at the central bank was emphasized by Cleveland Fed President Loretta Mester in a speech in April when she noted it led to better policy decisions and avoided group-think.

"I have seen firsthand how having a diversity of views expressed and discussed around the table can actually lead to better policy decisions, and there is actual research to back this up," Mester said. (Reporting by Lindsay Dunsmuir; Editing by Andrea Ricci)