State Takes on BoA

Threatening to withhold government business from Bank of America, Illinois public officials were negotiating yesterday with representatives of a shuttered Chicago company and the bank in an effort to broker a deal that would allow the manufacturer’s employees to receive vacation and severance pay.

About 250 employees who worked at Republic Windows and Doors have been holding a sit-in at the company, which was forced to close last Friday with only a few days’ warning after Bank of America suspended the company’s credit line.

Local elected officials have been visiting the employees and President-elect Barack Obama said he supports their efforts. Gov. Rod Blagojevich on Monday said he ordered state agencies to withhold business from the bank, but his press office later said the state would begin the process of such a move but hoped to avoid it with some sort of a settlement.

The governor said the ban could affect hundreds of millions of dollars, but it was unclear just what business would be involved.

Blagojevich was arrested yesterday on charges of attempting to sell Obama’s seat in the U.S. Senate.

A Cook County Board commissioner and several Chicago City Council members also said they would seek measures banning business with Bank of America if no resolution was reached. That ban could include city and county bond deals.

The Illinois Department of Labor is also preparing to file a complaint over the plant closing and state Attorney General Lisa Madigan is reviewing the company’s swift closure. U.S. Rep. Luis V. Gutierrez, D-Ill., said he would call for federal probes by the Justice and Labor departments.

The elected officials contend that Bank of America should be more cooperative in helping the company’s workers since it was the recipient of $15 billion under the federal bailout. The bank is also expected to receive another $10 billion.

 In a statement Monday, Republic Windows and Doors said it had planned to close the factory in January and that the plan had been in the works since October. The company had been in discussions for more than a month with Bank of America on the credit line it needed to bring its operations to a smooth halt and to finance workers vacation pay.

Bank of America in a statement Monday said it was not at fault for the company’s business decisions.

“We agree with the statements of public officials that Republic Windows and Doors should do all it can to honor its obligations to its employees and minimize the impact of failure on those employees,” the bank said. “When a company faces such a dire situation, its lender is not empowered to direct the company’s management how to manage its affairs and what obligations should be paid.”

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