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California official reconsiders sanctions against Swiss banks

LOS ANGELES, Nov. 16 (JTA) – A California official is having second thoughts about the sanctions he imposed on Swiss banks after a mixed Jewish response to his action. State Treasurer Matt Fong’s reconsideration of the sanctions comes as state and city officials who have initiated similar steps against Swiss banks are planning to meet Dec. 8 in New York to discuss further actions. The sanctions were imposed to press Swiss banks to move swiftly in locating and returning Jewish assets that were deposited before and during World War II. Since July, State Treasurer Matt Fong has liquidated some $2 billion worth of California funds in Swiss banks by not renewing short-term investments. He has also declared a moratorium on future deposits. “As a banker, I questioned whether I could retain confidence in [Swiss] banks to handle my money if they failed to identify these accounts and return the money,” Fong said in an interview. However, he received little feedback – and even some criticism – from the Jewish community after his move was made public last month. The initial objections came from Undersecretary of State for Economics Stuart Eizenstat, who told Fong that the Swiss were taking a number of initiatives to rectify past mistakes and that the California sanctions would antagonize the Swiss people and prove counterproductive. Visiting Switzerland over the weekend, Eizenstat said he was confident Washington could convince three states and New York City to reverse their decisions to boycott Swiss banks. But what seemed to upset Fong the most was a letter from the Anti-Defamation League, signed by its national director, Abraham Foxman, that carried a message similar to the Eizenstat communication. “That letter took me by surprise, coming from ADL,” said Fong. “There were no phone calls, they didn’t ask for a meeting, they just sent me this letter saying butt out.” Commenting on Fong’s remarks, David Lehrer, the local regional ADL director, said, “This is a very complicated issue. While we may differ on the best tactics, we applaud Mr. Fong’s efforts and intentions.” The state treasurer had earlier received strong verbal support from the World Jewish Congress and individual Jewish leaders. Fong, a leader in the Chinese American community, is a declared Republican candidate for the U.S. Senate seat held by Democrat Barbara Boxer. He denied that his action against the Swiss banks was linked to the hope of attracting Jewish votes in next year’s election. “I never even told anyone because I believe in quiet diplomacy. If I had wanted attention, I would have stood in front of a synagogue and made a big public announcement,” said Fong. Fong said a decision on the sanctions will be made after he attends the New York meeting, which also will include representatives of major Swiss banks and leaders of various Jewish organizations. Last month New York City Comptroller Alan Hevesi refused to allow Union Bank of Switzerland to participate in a letter of credit arrangement. The bank was the lead bank in a consortium that had successfully bid on the deal, under which the banks would be paid a fee for their guarantee of anticipated state and federal aid payments to the city. Morgan Guaranty agreed to take the place of Union Bank, which would have received close to half of a $1.3 million fee paid for the guarantee.