Institutional Deposits Corporation (IDC)

What Is the Institutional Deposits Corporation (IDC)?

The term Institutional Deposits Corporation (IDC) refers to an organization that allows investors to make large deposits and still receive Federal Deposit Insurance Corporation (FDIC) insurance for the entire amount. Founded in 2000, the IDC oversees the Money Market Account Xtra (MMAX) program, which provides depositors with an efficient way to make large deposits and secure FDIC insurance. The IDC network essentially splits up vast deposits of money among various banks to keep each bank under the protection limit to stay insured by the FDIC.

Key Takeaways

  • The Institutional Deposits Corporation splits up massive deposits between banks in its network to ensure FDIC insurance for amounts greater than $250,000.
  • It was founded in 2000 and consists of more than 50 banks spread across the country.
  • IDC deposits offer several advantages, such as ensuring insurance for large amounts and streamlining of account management tasks for such amounts.

Understanding the Institutional Deposits Corporation (IDC)

As mentioned above, the Institutional Deposits Corporation is an organization that looks after large deposits, while providing them protection against losses if their banks fail. Large depositors can make a deposit with the IDC, which divides it up through a network of large banks, which allows for FDIC coverage. This network of large banks makes it easier for the government to secure large, individual deposits. Banks included in the IDC network have to be capitalized, per the FDIC's mandated financial ratios.

Custodians, such as Wells Fargo and Pacific Coast Bankers' Bank in San Francisco, California, manage the MMAX structure. As of 2011, the massive amount deposit limit is $250,000 per bank. Prior to the existence of the IDC, each deposit was insured for up to $250,000. Any deposits over that amount would not receive FDIC protection.

The IDC network now 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 MMAX program takes that sum up to an even larger scale by allowing community banks to accept up to $12.5 million in money market deposits from a single person or commercial customer. This amount was raised from the previously announced $5 million. The funds are then distributed among up to 50 other banks within the IDC network, with each bank holding no more than $250,000 at a time.

The Money Market Account Xtra program allows larger depositors, such as commercial and institutional clients, the opportunity to have their deposits insured.

Special Considerations

As noted above, Wells Fargo is among the custodians 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 and protected in full by the FDIC.

MMAX account holders can make up to six withdrawals from their account monthly. 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.

The Advantage of IDC deposits

Expanded FDIC coverage is attractive to depositors, particularly when financial markets experience significant volatility. Firms, such as 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 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. The IDC network also streamlines account management because it ensures that account holders only have to deal with a single statement and a single rate for the entire transaction.

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  1. Businesswire. "IDC Deposits Announces Increase of FDIC Insured Capacity to $12.5 Million." Accessed Jan. 8, 2021.

  2. FDIC. "Deposit Insurance FAQs." Accessed Nov. 9, 2020.

  3. Businesswire. "IDC Deposits Provides Community Banks with Fully FDIC Insured Money Market Program." Accessed Jan. 8, 2021.