An executive committee of the finance officers' group recommended on Wednesday that cities and states take such action, dismissing arguments made by Swiss bank lawyers that sanctions were unconstitutional because state and local governments cannot formulate foreign policy.

To demonstrate that states and cities would follow the recommendation, California State Treasurer Matt Fong vowed his state would stop doing business with Swiss banks until they resume negotiating with Jewish groups.

``I will give direction that the state of California will not be seeking any investments with Swiss banks or subsidiaries of Swiss banks,'' he said.

``It's clear from their actions 50 years ago and their actions the past 18 months that we cannot trust the Swiss banks,'' he said. He added that his action ``should not be misconstrued as anattack upon the Swiss people,'' Fong said. California has about two billion dollars deposited in Swiss financial institutions, including the California pension fund, the largest US state pension fund. It was unclear if California would withdraw that money as well as curtail future investments. The Finance officers' committee is headed by New York City Comptroller Alan Hevesi. He and New York state officials scheduled a news conference on Thursday to announce their plans for sanctions.