Dec. 10 (Bloomberg) -- JPMorgan Chase & Co. plans to contribute $400,000 to Chicago’s Republic Windows & Doors LLC, where employees are staging a sit-in to protest the plant’s closing, U.S. Representative Luis Gutierrez said today.

JPMorgan, which owns 40 percent of Republic through its Chase Capital Partners investment unit, pledged the money “for the exclusive benefit of the plant’s workers,” Gutierrez said in a statement posted on his Web site. Thomas Kelly, a spokesman for the New York-based bank, declined to confirm the release.

Gutierrez, an Illinois Democrat, said JPMorgan Midwest Chairman William Daley, who is the inaugural committee co- chairman for President-elect Barack Obama, told him the only requirement for the cash was that “every cent go immediately to the workers so they can have a good Christmas.”

The agreement was reached last night with JPMorgan, the largest U.S. bank by assets, and Gutierrez continues to moderate negotiations. Rich Gillman, Republic’s chief executive officer, said in a statement he had raised personal funds to contribute toward a settlement with workers, without providing details.

Republic’s workers have occupied the factory since Dec. 5 and blamed Bank of America Corp. for forcing the closure by canceling the manufacturer’s credit lines. The workers are seeking wages they claim they’re owed. Bank of America said yesterday it planned to offer then company loans and “expressed concern” over Republic’s “failure to pay their employees.”

JPMorgan bought a stake in Republic in 2007 for a total of $12 million in debt and equity, Kelly said. Chase Capital wrote off the investment and resigned its board seat this year, he said.

Rescue Debate

The factory sit-in has fueled a debate over how $700 billion in federal funds are used to help the world’s largest economy weather the worst economic decline since the 1930s. Charlotte, North Carolina-based Bank of America has sold preferred shares worth $15 billion to the U.S. Treasury, while Merrill Lynch & Co., the securities brokerage it is buying, has sold $10 billion. JPMorgan sold $25 billion.

JPMorgan has the largest share of bank deposits in the Chicago area, followed by Bank of America, which acquired LaSalle Bank from ABN Amro NV last year.

The Chicago Sun-Times reported the news earlier today.

To contact the reporters on this story: Brian Louis in Chicago at blouis1@bloomberg.net; Elizabeth Hester in New York at ehester@bloomberg.net.

Last Updated: December 10, 2008 17:55 EST