What is an 'Institutional Deposits Corporation (IDC)'

Institutional Deposits Corporation (IDC) oversees the Money Market Account Extra (MMAX) program. The IDC was founded in 2000 as a way for investors to make large deposits, and still receive FDIC insurance for the entire amount. The creation of a network of large banks made it easier for the government to secure large, individual deposits. As of 2011, the massive amount deposit limit is $250,000 per bank.

The MMAX provides depositors with an efficient way to make large deposits and secure Federal Deposit Insurance Corporation (FDIC). Essentially, the IDC Network splits up vast deposits of money among various banks to keep each bank under the protection limit to stay insured by the FDIC.

BREAKING DOWN 'Institutional Deposits Corporation (IDC)'

Institutional Deposits Corporation (IDC) uses a network of large banks to separate up the large deposit of funds which allows for Federal Deposit Insurance Corporation (FDIC) coverage. Before IDC, each deposit at a bank was insured for up to $250,000. Any deposits over that amount would not receive FDIC protection. Now, the IDC Network splits up more massive deposits between banks. Each bank gets $250,000, so insurance can be guaranteed. The FDIC protection applies to qualified accounts, so if you have up to that amount in a bank account and the bank fails, the FDIC makes you whole from any losses you suffered.

The Money Market Account Extra (MMAX) Account takes that sum up to an even larger scale by allowing community banks to accept up to 5 million dollars in money market deposits from a single person or commercial customer. The funds are then distributed among up to 50 other banks within the IDC Deposit Network, with each bank holding no more than $100,000 at a time.

Custodians, such as Wells Fargo and Pacific Coast Bankers’ Bank in San Francisco, California manage the MMAX structure.

The Advantage of IDC deposits

Expanded FDIC coverage is attractive to depositors, particularly when financial markets are experiencing significant volatility. Firms, like commercial entities, public agencies and individuals want a safe place to park cash. The deposit is divided up between a network of more than 50 IDC Deposit Network banks nationwide to meet FDIC insurance requirements. Allowing the funds to be distributed across a network of banks helps keep both principal and interest secure during any unsettled or scary financial crises.

Wells Fargo is the custodian for the MMAX account structure. By dividing a single large deposit into smaller amounts among Network banks, lenders can ensure that the depositor's principal and interest are eligible for full FDIC protection. MMAX account holders can make up to six withdrawals from their account monthly. Money Market Account Extra (MMAX) can also be helpful for banks, as it makes large deposits possible for their customers and allows them to send on deposits or buy back equal or less than amounts.

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