Merrill Lynch offers a money management program that meets the
requirement that all NPC funds must be backed by the full faith and
credit of the US Government at all times.
-
Merrill Lynch Endowment Management Account used with the Insured
Savings Account
The ML account meets the full faith and credit requirement by constantly
sweeping funds into designated regional banks, limiting the amount in
each bank to $250,000 through the end of 2013.
This mechanism invokes Federal
Deposit Insurance Corporation (FDIC) protection while providing the
convenience and interest income of a money market account. To structure
its ISA, ML uses 35 regional banks. As a result, an ML ISA account can
accommodate up to $8 million through the end of 2013. Funds in an ML
account in excess of these amounts must be invested in CDs or
Treasuries. If an NPC maintains a separate account with one of the
designated regional banks, it should block funds from going into that
bank to avoid exceeding the FDIC limit (currently at $250,000 until the
end of 2013). For a modest fee, the ML account offers a full range of
services including checking, debit cards with reward plans, electronic
transfers, consolidated statements, etc.
All funds administered by an NPC must be held in instruments backed by
the full faith and credit of the US government at all times. This
effectively limits NPCs to instruments insured by the FDIC or the
National Credit Union Administration (NCUA) such as insured bank/credit
union accounts and bank/credit union CDs as well as Treasury bonds and
notes. All accounts held by one bank contribute to the FDIC limit so
NPCs either must spread their funds among banks or must establish a
brokerage account that incorporates a mechanism for providing FDIC
coverage such as the ML account named above. Securities Investor
Protection Corporation (SIPC) coverage provided by brokerage firms to
cover money market accounts and investments is not adequate because it
is not backed by the full faith and credit of the US government. Also,
NPCs may not invest in mutual funds, even those comprised of government
securities.
To establish an ML account, an NPC may contact a local financial
consultant or may contact NAVREF’s designated contact.
Merrill Lynch: Sandra Edwards at: T:
404-231-7772;
Email:
NPCs that use Merrill Lynch brokerage accounts to manage their funds
should not purchase CDs from Bank of America Corporation.
NAVREF recommends that NPCs instruct their financial consultants
(FCs) not to purchase CDs from Bank of America. In order to stay below the FDIC limit for a single
institution, larger NPCs also should not purchase CDs from other banks
on the list of ISA depository banks used by Merrill Lynch offices in the
region. A list of banks used by Merrill Lynch for ISAs is available from
your FC. NAVREF recommends that NPCs discuss this with their FCs and
follow up with a letter to be maintained in the NPC's Merrill Lynch file
detailing the request that the FC not purchase CDs from Bank of America, the Merrill
Lynch banks or from institutions used for ISA accounts. Please contact
your Merrill Lynch FC if you have questions or need additional
information.
