A Democratic congressman and mayoral candidate, Anthony Weiner, called on the Treasury Department yesterday to “stop its policy of playing footsie” with a Jordanian financial institution that allegedly funnels cash to terrorists.

At a press conference at Arab Bank’s only American branch – on 53rd Street between Madison and Fifth avenues – Mr. Weiner said that federal authorities should distribute the bank’s American assets to the families of terror victims, and then should expel the bank from the country. Mr. Weiner became the first member of Congress to call for the bank’s closure, said the lead attorney on a pair of class-action lawsuits against the bank, Mark Werbner. Relatives of about 100 Americans killed or wounded in terrorist attacks on Israeli soil have filed suit against the bank.

According to documents filed by Mr. Werbner with the Federal District Court in Brooklyn and made available to The New York Sun yesterday, a Saudi group used Arab Bank accounts and retail branches to send about $42 million in “death benefits” to the relatives of 200 so-called Palestinian “martyrs” in 2000 and 2001, including family members of suicide bombers. The transfer payments continued through early 2005, Mr. Werbner said.

The congressman said yesterday that Arab Bank’s presence in Midtown is a “black eye” for the city. Dozens of the bank’s customers are suspected of having links to the terrorist groups Al Qaeda, Hamas, and Hezbollah.

The bank has also managed personal accounts for the late Palestinian Authority chairman Yasser Arafat, and it repeatedly rescued Arafat’s group from the brink of bankruptcy.

Under an order issued by the Treasury Department in February, the bank’s Midtown branch can no longer open new accounts or transfer any funds, but it can still issue letters of credit for international transactions. And the February order requires the bank to maintain $450 million in assets in its American accounts.

Representatives of the bank could not be reached for comment yesterday. But earlier this year, an Arab Bank executive, Shukry Bishara, said that by promoting economic development on the Gaza Strip and the West Bank, his company has “eased hardship and despair and undercut militancy.”

The handful of passers-by who stopped to watch yesterday’s press conference did not seem to recognize Mr. Weiner. In an indication of the uphill battle that the congressman faces as he tries to garner name recognition outside his Brooklyn and Queens district, one man who tried to ask the candidate a question after the press conference, Adnan Shafi, 35, an attorney from the East Village, erroneously referred to Mr. Weiner as “governor.”

As the press conference ended, Mr. Weiner brushed Mr. Shafi aside and headed toward his car. But with television cameras still rolling, Mr. Shafi and the president of the Zionist Organization of America, Morton Klein, squared off in a shouting match that drew a larger sidewalk crowd than Mr. Weiner’s speech itself had attracted.

“Funding the Palestinian Authority is not a bad thing,” Mr. Shafi said to Mr. Klein. Calling Arafat “a man of peace,” Mr. Shafi asked: “If Arafat was a terrorist, why didn’t the Israelis kill him?”

Mr. Klein scoffed at Mr. Shafi’s claims, noting that Arafat allowed terrorist groups to use territories under the Palestinian Authority’s control as a launchpad for attacks against Israeli and American civilians.

Although he praised the congressman as a “courageous” leader who “is willing to speak out even if it isn’t politically correct,” Mr. Klein said that his presence at yesterday’s press conference does not signal an endorsement of Mr. Weiner’s mayoral bid.