State treasurer restores sanctions against Swiss banks

LOS ANGELES — California Treasurer Matt Fong has reimposed sanctions on three leading Swiss-based banks, citing their foot-dragging in settling dormant Jewish accounts from the Holocaust era.

Fong announced his actions last week, following a New York meeting with other state and local financial officials to discuss the negotiations between Swiss banks and Jewish groups on Holocaust-related claims.

Currently, the talks have broken down, with Jewish groups rejecting what the banks say is their final offer of $600 million.

"I am troubled by the slow pace set by the banks…it is time they opened their moral ledgers, not just their financial ledgers," Fong said during a telephone-news conference.

Fong said that until further notice, he will stop all investments and deposits from California's $32 billion portfolio in the U.S. subsidiaries of Credit Suisse, Swiss Bank Corp. and the Union Bank of Switzerland.

In a recent 17-month period, Fong said, he had put more than $2 billion into these banks, mostly in short-term investments.

Last December, Fong lifted a four-month moratorium on Swiss bank investments, citing criticism from the State Department, and what he considered a lack of support from Jewish organizations, particularly the Anti-Defamation League.

Several times during the following months, Fong tried to apply pressure by saying that sanctions would be reimposed if he did not see satisfactory movement toward a settlement. The March announcement that negotations were beginning placated Fong, but the recent stalemate in the talks proved to be the final straw.

The current sanctions will last "as long as I am the state treasurer," he said. Fong is the Republican candidate in the November election for U.S. senator.

In a related development, the California State Assembly Insurance Commission has unanimously passed a bill to set up a four-year, $16 million research fund to help recover unpaid insurance claims for some 20,000 Holocaust survivors or descendants of Holocaust victims, living in California.

The bill, by state Sen. Tom Hayden (D-Los Angeles), has already been approved by the state Senate.

Tom Tugend

JTA Los Angeles correspondent