LOS ANGELES -- A Ne Jersey bank is exploring possible legal action against the treasurer of California for her criticism of the bank's advertisements in a letter to Newsweek magazine.
The bank's move is the latest skirmish in a war of words between the bank and Treasurer Kathleen Brown over the usefulness of college savings bonds sold by several states, including California. Ms. Brown sees the zero coupon college savings bonds as one way for parents to save for higher education.
The College Savings Bank of Princeton, N.J., however, has placed advertisements in various publications, including The Wall Street Journal, to condemn the bonds as "highly speculative instruments." The advertisements promote the bank's own college savings certificate of deposit.
Newsweek recently pulled a bank advertisement after Ms. Brown wrote to complain that an earlier ad went too far by alleging that college savings bonds are "unsafe and unsound." While Ms. Brown did not directly ask the magazine to withdraw the advertisement, she questioned Newsweek's "truth in advertising" standards.
In response to Ms. Brown's letter, Peter A. Roberts, chairman of the College Savings Bank, said he has retained former U.S. Appeals Court Judge Shirley M. Hufstedler to look into possible legal action against California's treasurer.
"Kathleen Brown may have violated the federal civil rights act by misusing the power of her office to deprive the bank of its speech rights protected by the First Amendment of the United States Constitution," said Mr. Roberts. "We are very serious on this matter."
It remains uncertain whether there is any basis for legal action by the bank. Mr. Roberts drew more attention to the issue with a lengthy press release Tuesday announcing the retention of Ms. Hufstedler. Ms. Brown could not be reached for comment.
Ms. Hufstedler was U.S. secretary of education from 1979 to 1981, and served as a judge with the Los Angeles County Superior Court. Ms. Brown's father, former California Gov. Pat Brown, appointed Ms. Hufstedler to the California Court of Appeals in the late 1960s. Hufstedler is a partner with Hufstedler, Kaus & Ettinger in Los Angeles.
The controversy surrounding the Newsweek advertisement prompted Peter W. Eldredge, the publisher of the magazine, to reply to Ms. Brown's letter. Mr. Eldredge maintained in his Nov. 18 letter that he was "confident that [readers] are discerning enough to separate editorial matter from advertising copy." Mr. Eldredge did not state whether Newsweek would run the advertisements again.
Newsweek said it withdrew a College Savings Bank advertisement on Nov. 8 that specifically disputed Ms. Brown's assertions because there was no legal release from Ms. Brown, "the person who is named and quoted in the ad."
The Wall Street Journal, The New York Times, the California Journal, and the San Francisco Chronicle have elected to run the advertisement pulled by Newsweek, according to Mr. Roberts.
A spokeswoman for Ms. Brown said the Treasurer this week sent another letter complaining about the advertisements, this time to Robert Higgins, director of advertising at The Wall Street Journal. The spokeswoman did not say whether other letters will be sent.