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Fong's announcement came in New York, at a conference in which some 200 public finance officials from across the country met to discuss sanctions against Swiss banks.

The meeting resulted in a general agreement to adhere to a three-month moratorium on sanctions — in deference to Swiss efforts to rectify the problems and possibly in anticipation of a multibillion dollar "global settlement."

Since Fong first imposed the sanctions, he had liquidated some $2 billion worth of California funds in Swiss banks.

He was somewhat surprised, however, by the mixed feedback he received from the Jewish community. Fong said that the Anti-Defamation League, for example, essentially told him to "butt out."

Also, Fong took criticism from Undersecretary of State Stuart Eizenstat, who said that the Swiss were taking positive steps and that Fong's actions might anger them.

Just prior to the New York conference, Fong said he had been generally pleased with the efforts of Swiss banks since he imposed the sanctions. In particular, he cited the creation of a $200 million Holocaust survivors fund, the establishment of commissions to study dormant World War II-era accounts and the disclosure of account information.

"We will continue to monitor the banks closely to ensure that they are cooperating with investigations into this matter," said Fong, a Republican candidate in next year's U.S. Senate race. "If it appears after three months that Swiss banks are wavering in their commitment, we will not hesitate to reinstate restrictions.

"The world is watching now; it is up to the banks to verify their good standing."