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El Paso· Houston· San Antonio

February 1979

Food Consumption Patterns: More Change or Less?


International Banking Act Now Being Implemented


Remote Disbursement Policy Adopted

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (

Food Consumption Patterns:
More Change or Less?
By Don A.


The commodity composition of the American diet
is constantly changing. The seemingly slow changes
in consumption patterns have actually been relatively rapid in recent years. Per capita consumption
of fluid whole milk. for example, dropped about
35 percent between 1960 and 1976. This particular
change was largely due to a decline in the number
of young children. children being the biggest consumers of whole milk. However, food consumption
patterns are affected by many factors, including
changes in relative prices, income, tastes, information on nutrition, technology, regulations, population characteristics, and so on. Some of the factors causing food consumption patterns to change
in the past, such as the maturing of post~World
War II baby~boom children, will be less influen~
tial in the years ahead. But others, like information
on nutrition and food safety, could become much
more important.
Food consumption is difficult to measure with
precision. The U.s. Department of Agriculture reports estimates of per capita "consumption" for
major food categories in terms of retail~weight
equivalents disappearing through the marketing
system. There are no reliable estimates of pounds
of food actually ingested by the populace, but the
amounts are undoubtedly lower than "market disFebruary 197t/Voh:.

appearance" because of spoilage, shrinking, and
waste beyond the retail level. Nevertheless, estimates of consumption based on market disappearance do provide good indications of changes in per
capita food consumption over time.

Growth in importaDce of animal products
afler World War n
Per capita consumption of food has trended down~
ward since the tum of the century, but much of
the reduction in pounds has been due to increased
processing and a shift away from bulky foods.
While production cycles and weather have caused
short-run variations in total pounds available for
consumption. animal products have gradually increased in importance relative to crop products.
Crop products have accounted for a larger proportion of total per capita consumption, but the proportion is slowly diminishing.
Consumption of animal products increased substantially during the forties. The higher level of
consumption was probably influenced to a great
extent by World War II and related shifts in employment and income, but per capita consumption
of animal products has remained well above preWorld War II levels. The mix of animal products
has continued to vary, however, 8S per capita con1

Current high per capita consumption
of animal products began in the 1940's
1,100 - - - - - - - - - - - - - - POUNDS




1.000 -







U.s. Oepertment of Agriculture.

sumption of meats like beef and poultry has increased and per capita consumption of dairy
products and eggs has declined.
As one would expect, consumption of individual
foods has shown much greater year-ta-year variation than the broader measures of consumption.
However, an annual change in consumption for a
specific commodity may only indicate an abnormal
amount of production. This is especially true with
nonstorable commodities. where there is a tendency to consume whatever is produced. Thus.
comparisons of per capita consumption averaged
over several years may be more indicative of a
change in consumption patterns than comparisons
of particular years.

More beef, poultry, vegetable oils;
fewer potatoes, grain products
Average per capita consumption of meat has increased at least 10 pounds in each succeeding

decade since the 1930's. but only beef and poultry
have made steady gains, as indicated in the accompanying table. Average per capita pork consumption has declined only slightly over the years,
but as a proportion of total meat consumed, it has
declined significantly. Lamb and mutton consumption has dropped to less than half the level of
earlier decades. And though relatively stable for
a long period of time. average per capita consumption of fish has been rising in the seventies.
The persistent rise in per capita beef consumption is most often attributed to rising incomes and
a taste preference for beef over other meats. The
increase in per capita poultry consumption from
an annual average of 15.9 pounds in the 1930's to
49.9 pounds in 1970·76 appears largely due to
technological advances in production, which have
lowered costs and. thus. prices of poultry relative
to other meats. Turkey continues to break away
from its traditional role of being solely a holiday
food. And if trends continue, chicken may become
Feder.1 R... rve a.nk of o.n••

Beef and poultry are the only meats
steadily gaining in per capita consumption


Awrage annual pound. consumed J)er caplla, relall welgMs'



















Lamb and mutton' .. .

5 .•







Beef and veal ' . .




Fish' ........... '"


11 .4


10. 1




Chicken' ......







4 1.2

Turkey' .. . . .. ..




3. 1











Total meats ...

1. EXCludes g am. and edibl. oHala.
2 Reta ll-<:ul eQUivale nt.
3. Ed ible weight.
4. Remdy-to.cook weight.
SOURCE: U.S. Dep a rtment Of Agrlcullure.

more important in the American diet than pork
within a few years. Pork is generally considered
to be the number one substitute for beef but has
failed to compete effectively with beef and poultry
in recent years for a larger share of the expanding
consumer appetite for meat. The declining popularity of lard beginning in the fif ties has been partially responsible.
Lamb and mutton have never accounted for a
very large proportion of per capita meat consumption in the United States. The demand for lamb
has been rather limited. and high costs of producing lamb for meat have encouraged shifts to producti on of cattle. Many Americans do not acquire
a taste for lamb at an early age. and relatively high
prices discourage experimentation later in life, Per
capita consumption of fi sh has apparently been
boosted in the seventies by the growth of fastfood restaurants and by larger catches of tuna.
Some foods have experienced more dramatic
changes in per capita consumption than meats.
Associated with the long-term decline in consumption of animal fats has been a tremendous increase
in consu mption of vegetable oils. Consumers have
increasingly substituted margarine and shortening
for butler and lard, respectively, since the early
1900·s. Margarine has traditionally been priced
lower than butter, and lard has typically had a
lower price than shortening. Health concerns and.
possibly, relative cooking qualities have caused
consumers to switch from lard to higher-priced
vegetable shortenings . Average annual per capita
consumption of vegetable oils in 1970-76 was 35
percent greater than in 1960-69. Vegetable oils not
February 1979/Volce

only have been substituted for animal fats but also
have boosted total per capita consumption of fa ts
and oils.
Per capita consumption of dairy products (including butter) trended upward for many years
before reaching an average of 417 pounds in the
forties. Since then, consumption has trended downward to near-record low levels in the seventies.
Average annual per capita consumption in 1970-76
was 353 pounds. down 18 poun ds from the 1960-69
average. Per capita consumption of low-fat milks.
cheeses, and frozen dairy products h as increased
since the midforties but not enough to offset the
declines in butter and whole milk. The changing
age distribution of the population has had a significan t impact on the types of dairy products

If trends continue, chicken may become
more important in the American diet than
pork within a few years.

Egg consumption over time resembles that of
dairy products. Per capita egg consumption trended
upward during the first half of the century, peaked
with an annual average of 47 pounds in the 1950's.
and declined to an average of 38 pounds in 1970-76.
Consumption of eggs has been affected by concerns over their cholesterol content and possibly
by the substitution of less time-consuming break3

The commodity composition of the American diet changes substantially over time







50 -


45 -

400 -



35 -


30 -



1910 1920 1930 1940 1950 1960 1970



130 -

1910 1920 1930 1940 1950 1960 1970

340 - - - - - - - - - - - - - - - - - - - - - - - - POUNDS


300 -

120 -

200 -

110 -

220 -


180 -


100 -


~·."'···i ..,


140 -


100 _


1910 1920 1930 1940 1950 1960 1970





:~~~O:~T~~~es '....~...../~.......:\............

1910 1920 1930 1940 1950 1960 1970




260 -



60 50 -


.~/ .


220 -



30 -



20 -

100 60


1910 1920 1930 1940 1950 19601970

10 -


.J ............ , ........ .. .

:t\:'\ .......


1910 1920 1930 1940 1950 1960 1970

Federal RIlIe",1I

a.nk of n.lI..

fast foods as a higher proportion of wives have
entered the labor force.
The consumption of grain products has declined
consistently but at a relatively moderate pace in
recent years. Per capita consumption of grain products dropped from an annual average of 278 pounds
in 1910-19 to 140 pounds in 1970-76. Potatoes and
sweet potatoes have followed a similar course.
These trends appear to be the result of many factors, one of the most important being the tendency
to substitute "more preferred" foods as incomes
Vegetable consumption trended upward from an
average of 202 pounds per capita in 1910-19 to a
peak average of 238 pounds in 1940-49. Per capita
consumption of vegetables has remained relatively
stable since 1950, with increases in canned and
frozen vegetables balancing most of the decline
in consumption of fresh vegetables.
Fruit consumption has been highly variable,
especiall y prior to 1950, but has fo llowed the same
general pattern as for vegetables. Per capita consumption of processed fruits has increased as consumption of fresh fruits has declined. At least part
of the decline in per capita fruit and vegetable consu mption during the fifties and early sixties may
be explained by relatively higher prices than for
other foods. Added convenience and less rapidly
rising prices in a number of years account for much
of the increased substitution of processed for fresh
fr uits and vegetables.
Consumption of sugars and other sweeteners increased from an annual average of about 108
pounds per capita in the 1950's to 123 pounds in
1970-76. Greater consumption of soft drinks, especially among the unusually large number of young
people, has been largely responsible.
Income, age structure, technologyforces of change
Rapidly rising per capita income, the maturing of
post-World War II baby-boom children, and advances in food-related technology have been the
primary forces behind changing food consumption
patterns since 1950. Since then, per capita disposable personal income, meas ured in constant dollars, has nearly doubled. As incomes rise. it is only
natural that "more desirable" foods be substituted
for "less desirable" foods. At some point, further
increases in income have little or no effect on the
amounts or types of foods consumed; however, as
families move up the income scale, certain foods
February 1979/Voh::e

are more responsive to changes in income than
Several studies have examined the relationship
between food consumption and income. One analysis. using cross-section data from the 1965 household fo od consumption survey by the U.S. Department of Agriculture, indicates that foods such as
lard. dry vegetables, and grain products tended to
be "less desirable" foods in 1965. 1 That is, per
capita consumption of these foods tended to decline in response to an increase in income. Cooversely. per capita consumption of foods like beef.
lamb, turkey. lettuce, and frozen fruits and vegetables responded positively to an increase in income. Thus, changes in real income and the distribution of those changes among income groups have
exerted an influence on the types of food consumed.

The age distribution of the population has
had an unusual impact on per capita food
consumption during the past 20 years.

The age distribution of the population has had
an unusual impact on per capita food consumption
during the past 20 years. Approximately 60
million children were born in the 15-year span from
1947 to 1961, compared with only about 53 million
born in the 1S-year period from 1963 to 1977. As
the baby-boom children have matured and gone
through a time of rapidly changing consumption
patterns, the effects of the changes have been
magnified by the relatively large number of people
involved. Items like whole milk, baby foods. cereals. and candy have heen adversely affected,
while "adult" foods such as shellfish, broccoli. and
lettuce have shown increases in per capita
Technology has obviously improved the processing, storage, and distribution of many highly perishable foods . Although the effects of technology
are difficult to measure, technological advances in

1. P. S. Geo rge and G. A. King. Consumer Demond for
Food Commodities in the United Sioles, wilh Projections
for 1980, Giannini Foundation Monograph no. 26
{Berkeley: California Agricultural Experiment Station.
1971), pp. 67-75.


every segment of the food system have affected
the types and quantities of foods available for
Rising importance of consumer characteristics.
health concerns, regulation
Of the many factors that will shape food consumption patterns in the years ahead, a few appear to be
taking on new significance. Even in middle-aged
adulthood, members of the baby boom will exert
a strong influence on food consumption by magnifying the effects of changing consumer habits and
characteristics. Another important factor is the
growing interes t in nutrition and food safety. Past
experience with eggs and animal fats has shown
that consumers do adjust food purchases to reflect
current information (or perhaps misinformation)
on nutrition. Also, Government regulation of the
food system appears to be increasing, which could
have an impact on the types of foods produced
and consumed.

Past experience with eggs and animal fats
bas sbown tbat consumers do adjust food
purchases to reflect current information (or
perhaps misinformation) on nutrition.

One of the most significant changes in consumer
characteristics is the trend toward smaller households. Average household size has declined fro m
3.33 persons in 1960 to 2.81 persons in 1978. Young
adults are postponing marriage longer and having
fewer children than in the past. In 1978, almost 48
percent of the women between 20 and 24 years of
age had never been married. compared with 28
percent in 1960.
There is some evidence that small households
consum e somewhat different types and quantities
of foods than larger households. Based on survey
data collected in 1965, Le Bovil foun d that small
households tended to be high consu me rs of poultry, vegetables. ice cream, cheese, and fruits while
larger households tended to consume more potatoes and grain products.! Small households also
2. Corinne B. Le Bovit, ''The Impact of Some Demographic Changes o n U.S. Food Consumption 1965·75 and
1975·00," Notio nal Food Siluolion, no. NFS-156 (May 1976).
pp . 25-29.


consume more food per person tha n larger households. primarily because of the absence of small
The proportion of the population over age 60
is growing and contains relatively more women
than men. Analysis of the 1965 food expenditure
data indicates that older people consumed less in
all major food categories except fruits than the
middle-aged.' And as would be expected, women
consumed less in each major food category than
Added services have become very important to
consumers as more women hold jobs and the number of one-person households is increasing. If the
food marketing system is slow to respond in certain areas, consumption of some foods could be
affected. Fast-food establishments have become
popular with a large number of consumers. Fastfood restaurants increased their share of the
"away-from-home" food market from 10.5 percent
in 1965 to 26.0 percent in 1975. Since certain foods,
like ground beef. fish. pickles. and potatoes, lend
themselves to this type of service more than some
others, any change in the popularity of fast-food
restaurants will affect the food product mix.
Public interest in human nutrition is evidenced
by the fact that Dietary Goals have been proposed
by the Senate Select Committee on Nutrition and
Human Needs. These goals are merely recommendations. but the fact that they were developed and
published illustrates Government concern about
nutrition-related health problems.
Dietary Goals for the United States. published in
December 1977, recommends that the average
American diet be modified to include less refined
sugar, fat, cholesterol, and sodium and more "naturally occurring" sugars and complex carbohydrates. The goals also recommend that individuals
consume only as much energy (calories) as expended. Reaching these goals would likely increase
per capita consumption of fruits , vegetables. whole
grains. low-fat milk. lean meats, poultry. and fish
while decreasing consumption of processed sugars ,
animal fats, eggs, and foods high in salt content.
The association of certain dietary patterns with
several of the leading causes of death and the considerable difference of opinion among scientists
about the validity of th ese associations open the
3. Larry Salathe and Rueben Buse, "The Relation9bip
Between Household Food Expenditures and Household Size
and Composition," National Food Review. no. NFR-l
(January 1978). pp. 25-28.
Federal ReMrve Bank of Dana.

door for increasing Government involvement in
nutrition and food safety issues. More (or less)
regulation would normally be expected to change
relative costs and, thus, affect food consumption
patterns primarily through changes in relative
prices. However, in the area of food safety, choosing to pay a higher price for one food over another
is not always an alternative. It is unlikely that factors influencing personal choice could affect consumption of any food as quickly and completel y
as a regulation that bans a specific food or significantly alters its perceived quality. The potential
for incorrect or misleading information on food
safety seems to be particularly great, since there
is little opportunity to experiment with humans.
Over the long term , food consumption patterns
will be shaped by a myriad of factors. including

a population with a disproportionately large number of young adults, a rising median age, and a disproportionate number of women in the older age
categories. Changing life-styles are already having
an effect with the move toward smaller households
and more two-income families. Government also
appears to be expanding its regulatory role, which
could have a profound effect on some foods and
services. Even if Government does not increase its
regulation of the food system, consumer food purchases are likely to be increasingly influenced by
information on nutrition and food safety. These
factors, together with ongoing trends, suggest that
food consumption patterns will continue to change
fairly rapidly in the years ahead. Poultry, fish. beef,
processed fruits and vegetables, and low-fat dairy
products seem to have the edge over other foods.

Consumer Pamphlets Available
Three new consumer education pamphlets, entitled
"If You Use a Credit Card." "Consume r Handbook
to Credit Protection Laws," and "How to File a
Consumer Credit Complaint," are now available
free of charge to banks, other businesses, and
"If You Use a Credit Card" explains credit-card
protection under Federal laws. including how to
limit risk if a card is lost or stolen, and what to do
if goods or services purchased with a credit card
are not satisfactory. The pamphlet also explains
how to compare credit-card costs.
"Consumer Handbook to Credit Protection Laws"
outlines consumer rights under the major credit
protection laws and how borrowers can use the
laws to shop for credit, apply for it, keep up credit
Febru.ry 197B/Volce

standings. and complain about possible abuses.
The booklet also points out the laws' solutions to
credit practices used in the past to discriminate
against women and minorities.
"How to File a Consumer Credit Complaint"
briefly describes the various consumer credit laws
and what a consumer can do if he feels his rights
under the Jaws have been violated. The pamphlet
includes a tear-off form that can be used by consumers in making complaints involving commercial
banks. However, the pamphlet encourages the consumer to first deal directly with the bank to try to
resolve the misunderstanding.
Requests for the pamphlets may be directed to
the Bank and Public Information Department of
this Bank. (214) 651-6267.

"Ped Quotes~~
Brief Excerpts from Recent Federal Reserve Speeches, Statements, Publications, Etc.

"We arc now only at the beginning of the process of restoring equilibrium to
international financial markets. What happens in those markets is important to us
because uncertainties there feed back into our economy, holding down investment
and driving up our inflation rate. An improved trade balance would also directly
support our economy as we move to slow the rate of growth of domestic demand. It
is sometimes overlooked that OUf exports are now an important part of total u.s.
production accounting for over 11 per cent of all goods produced. More broadly,
however, sustained reduction in our trade deficits would be a signal to the market
that we are making progress on the fundamental problems of our economy. There is
an especially delicate balance of risks in slowing the growth of the economy and
slowing the rate of inflation. But in my view, slowing inflation is critically needed
not only to restore equilibrium internationally but also as a precondition for con~
tinued healthy growth at home.
"Therefore, I repeat before this audience some of the actions I recommended in
early summer and again in October.
"First, additional fiscal restraint must be applied not only because it is needed
to reduce inflationary pressures but also because it has become a domestic and
international flag bearer for market confidence."
"Second, spending cuts should permit a margin of revenue to be used to spur
new investment in plant and equipment to modernize our productivity capacity and
generate new jobs and to encourage a lower rate of wage increase.
"Third, we should lift the straight jacket of interest rate controls both
at federal and state levels so that our people can be paid a positive rate for savings
not the negative rates presently evident."
"Fourth, the United States needs a strong energy program of conservation and
new production of both old and new types of energy preferably financed by the
private sector and stimulated by rapid investment tax write-offs and lower capital
gains taxes."
"Finally we must have the political and public strength and support to sustain
monetary restraint even in the face of modest reverses of growth rate or unemployment, for the strength of the dollar at home and abroad is critical to our place in
the economic world."
Philip E. Coldwell, Member, Board of
Governors of the Federal Reserve System
(At Miami, Florida, December 6, 1978)


Federal Reserve Bank of DaDae

International Banking Act
Now Being Implemented

The International Banking Act, signed into law on
September 17, 1978, gives Federal bank regulatory
agencies authority to supervise U.S. branches and
agencies of foreign banks. Generally. the act brings
foreign banks operating in the United States
through branches. agencies. and so on, under the
same bank regulatory controls that apply to domestic banks. Under the act, some 250 foreign
bank branches and agencies, with assets of $92
billion, that are operating in the United States
will be subject, for the first time, to reserve requirements and deposit insurance.
The Federal Reserve Board, the Comptroller of
the Currency, and the Federal Deposit Insurance
Corporation have primary responsibility for implementing the International Banking Act. Although
certain aspects of the act are self-implementing,
others require administrative action by the
One such action was recently taken by the Board
of Governors. The Board eliminated the 10-percent
minimum reserve requirement on U.S. deposits of
Edge Act corporations, which are U.S. corporations engaged in international banking and finance.
With this amendment to Regulation K, Edge corporations are now subject to the same reserve requirements on domestic deposits as member banks.
The new rule was effective with the reserve comFebruary 1979/Voice

putation period beginning November 16, 1978.
Other aspects of the act are being implemented.
The three agencies are preparing regulations, procedures, and forms required by the following provisions of the act.
One provision allows foreign ownership of Edge
corporations and permits foreign citizens to serve
on their boards of directors.
Another provision subjects branches and agencies of foreign banks with total worldwide consolidated bank assets in excess of $1 billion to Federal
Reserve reserve requirements and interest rate
The law authorizes the Comptroller of the Currency to license and supervise Federal branches or
agencies of a foreign bank in any state in which
the parent foreign bank is not operating a state
branch or agency and in which the establishment
of a foreign branch or agency is not prohibited by
state law.
Under the act, deposit insurance is required for
branches of foreign banks that receive deposits of
$100,000 or more. In addition. foreign banks operating a branch, agency. or commercial lending company in the United States must register with the
Federal Reserve, and foreign banks maintaining
other offices in this country must register with the

Remote Disbursement
Policy Adopted
A policy discouraging remote disbursement-the
use of remote banks by businesses, usually corporations, to delay payment of bills-has been
adopted by the Board of Governors. "The Board
believes the banking industry has a public respon~
sibility not to design, offer, promote or otherwise
encourage the use of a service expressly intended
to delay final settlement," the policy states. "The
Board is calling on the nation's banks to join in the
effort to eliminate remote disbursement practices."
Federal Reserve bank examiners have been
alerted to "pay particular attention to the check
services offerings of banks to their customers."
If banks do not voluntarily comply with the policy,
legislative or regulatory action could be taken to
bar the practice.
Remote dishursement is the practice of a corpo-

ration writing checks on a zero-balance account in
a distant bank. As checks are presented to the
bank for payment, the corporation is notified and
funds are transferred to the account to cover the
checks. Corporations use the system to control
cash disbursements, take advantage of float, and
maximize use of cash resources.
The Board is concerned that some remote disbursement plans may constitute unsafe and unsound banking. The primary risk is that the system could lead to unsecured extensions of credit
by the remote banks. In addition, the practice delays funds availability, thus depriving suppliers
and consumers of timely use of funds owed to
them, Furthermore, the practice creates inefficiencies in the check clearing system by slowing

Dallas Reserve Bank
Reports 1978 Earnings
Current gross earnings of the Federal Reserve Bank
of Dallas amounted to $434.8 million in 1978, Current expenses for the Bank and its three branches
totaled $34.3 million, leaving current net earnings
of $400.5 million.
Net earnings after net additions or deductions
and assessments and before payments to the U,S.
Treasury totaled $361,9 million. Of this, payments
of $353.7 million were made to the Treasury as interest on Federal Reserve notes, statutory dividends of $3.6 million were paid to member banks,
and $4,5 million was added to surplus. The Federal Reserve pays the Treasury all net earnings in
excess of the statutory dividend to member banks
and additions to surplus to bring the surplus to the
level of paid-in capital. In 1978 the Federal Reserve
System made payments of $7,006 million to the

Treasury. Of this, 5 percent was paid by the
Federal Reserve Bank of Dallas,
Assessment for expenditures of the Board of
Governors amounted to $3 million for the Dallas
Bank. There was a $35.7 million net deduction in
the profit and loss account, mainly because of a
net loss of $28.8 million on foreign exchange operations and a net loss of $6.7 million on sales of
U.S. Government securities,
Earnings of the Federal Reserve System are derived primarily from U.S. Government securities
that the Federal Reserve has acquired through open
market operations, one of the tools of monetary

Federal Re.erve Bank of Oal1a.

Mathews Redesignated Chairman,
Hines Designated Deputy Chairman
of the Board of Directors

In"ing A. Mathews. Chairman of the Board and
Chief Executive Officer of Frost Bros .• Inc., San
Antonio, Texas. was redesignated Chairman of the
Board of Directors of the Federal Reserve Bank of
Dallas for 1979 by the Board of Governors. Gerald
D. Hines, Owner, Gerald D. Hines Interests, Houston, Texas. was appointed by the Board of Governors as a Class C director for a three-year term
and was designated Deputy Chairman for 1979.
In both capacities, Hines succeeds Charles T.
Beaird, Publisher, Shreveport Journal, Shreveport,
:Mathews has been a director of the Dallas Federal Reserve Bank since January 1, 1974, and Chairmlm of the Board of the Bank since January 1, 1977,
Pri or to his appointment to the Head Office Board,
Mathews served a three-year term as a director of
Ihn San Antonio Branch. In addition to his position with Frost Bros., Mathews is President of the
Re tail Division of Manhattan Industries, Inc., is a
fOlmer director of the San Antonio Symphony and
the San Antonio United Way, and is active in other
business and community affairs.
Hines had served as a Class B director of the
Federal Reserve Bank of Dallas since January 1,
Fehruary tlmt/Volce

1975. He is a governor advisor to Rice University,
Secretary of the Urban Land Institute, and a director of the Urban Land Research Foundation, the
Houston Symphony Society, the Society for the
Performing Arts, and the Texas Medical Center
and is active in other business and community affairs. He was elected Key Houstonian of the Year
in 1967 by the Houston Board of Realtors and was
named Houston Businessman of the Year by the
Houston Chapter of the Stanford Business School
Alumni in 1975. That same year, he was named a
Distinguished Engineering Alumnus by Purdue University's School of Engineering.
The nine directors of the Dallas Reserve Bank
are grouped into three classes, which reflect a wide
range of business and public interests in the Eleventh Federal Reserve District. Class A and Class
B directors are elected by member banks, and Class
C directors are appointed by the Federal Reserve
Board of Governors. Each year the Board of Governors designates the Chairman and Deputy Chairman from among the Class C directors.


GJ?eg ula tory GJ3riefs
Review of Recent Actions of the Board of Governors of the Federal Reserve System

LOANS TO INSIDERS has been proposed for public comment by the Board of Governors, Required
by the Financial Institutions Regulatory and Interest Rate Control Act of 1978, the amendment to
Regulation 0 would limit lending to an insider
(other than a director) and all related interests of
the insider to 10 percent of the bank's capital and
surplus. The proposed rules would also prohibit
payment by the bank of certain insiders' overdrafts. require that loans to insiders or their related
interests be made on substantially the same tenns
available to others. and require that all loans to
insiders in excess of $25.000 be approved in ad·
vance by a majority of the bank's board of direc·
tors, with the interested party abstaining.
proposed for public comment by the Board. De·
signed to protect consumers using electronic funds
transfer (EFT) services, the proposed rules would
limit a consumer's liability for unauthorized use
of an EFT card and restrict the unsolicited issu·
ance of the cards. These rules would implement
sections of the act that became effective February
8,1979. Other sections, including the provision giv·
ing the Board general rulemaking authority for the
statute. are scheduled to go into effect in May 1980.
• SECURITIES REGISTRATION AND DISCLOSURE RULES, similar to those issued by the Securities and Exchange Commission, have been
adopted by the Board of Governors. the Comptroller of the Currency, and the Federal Deposit Insurance Corporation. The rules. which affect banks
with more than 500 stockholders. became effective
January 29, 1979. For further information. contact
the Bank Supervision and Regulations Department
of this Bank, (214) 651-8274.


Board. The amendment. enacted last July, exempted mortgage-related open-end credit transactions from the three-day right of rescission provided by the Truth in Lending Act in order to
establish a new credit source for consumers. The
exemption was available only to the third-party
creditors and not to sellers of goods. In response
to protest by consumer groups, the Board has postponed implementation of the amendment and has
published it as a proposal for comment.
TRUTH IN LENDING ACT have been adopted by
the five Federal financial institution regulators.
Under the guidelines. effective January 4, 1979.
lenders are required to reimburse individuals for
overcharges of $1 or more on outstanding loans
consummated after October 28, 1974. Proposed
guidelines were published in October 1977, and
over 300 comments were received. Final guidelines
were adopted by the five agencies in December
1978. For additional information. contact the Consumer Affairs Division. (214) 651-6169.
HOLDING COMPANIES have been adopted by the
Board. One permits publication in the Federal Regjster, instead of local newspapers, of a bank holding
company's intent to engage in non banking acHv·
ties. The second. also an amendment to Regulation
Y. clarifies and formalizes practices already in use
by permitting domestic bank holding companies
and their subsidiaries to conduct previously ap·
proved non banking activities overseas 45 days after
informing the appropriate Reserve Bank. For further information, contact the Holding Company
Supervision Department of the Federal Reserve
Bank of Dallas. (214) 651-6120.