While it’s somewhat heartening to see the MSM pick up the Stanford story, one can’t help but be struck by the ultracautious way in which they’re doing so. The WSJ, for instance, finally gets on the case today, under the bland headline "Investment Firm Is Probed", buried on page C6. The story is entirely about the regulatory investigations, rather than the widespread belief that Stanford International Bank has to be a fraudulent organization.
Bloomberg, too, is taking the SEC investigation angle: its headlines are "Billionaire Stanford’s Firm Said to Face U.S. Probe" and "Allen Stanford Vows ‘Fight With Every Breath’ Amid U.S. Probes". And the NYT decided to run with "U.S. Agents Scrutinize Texas Firm".
The closest thing to a MSM article accusing SIB of looking fraudulent is the BusinessWeek story — "Is Stanford Financial’s Offer Too Good to Be True?" — although even that one notably refuses to even mention Alex Dalmady and his thesis on the bank. (The reporter, Matthew Goldstein, did talk to Dalmady, as has seemingly every other major news organization: it’s clear they’re not ignoring him, but it’s equally clear they’re hesitant to trust his analysis, or at least to print articles based on it.)
A hint of what’s going on behind the scenes can be seen in the Alphaville chat transcript from yesterday. PM and NH are Paul Murphy and Neil Hume, Alphaville editors:
Well, been looking at this SIB — Sir Allen Stanford story
Anyway — think we are cleared to publish our stuff now
only taken 12 hours…
for our story we just need sign off from the editor now
Nothing appeared yesterday, beyond a single blog entry reporting what was going on elsewhere in the media. (It did, however, mention Dalmady’s report.) Finally, today, the FT pushed forward with a serious article headlined "Cricket fanatic suddenly on a sticky wicket" which features Dalmady’s allegations front and center. (To put that timing in perspective, my first blog entry on the subject –which talked about Stanford and Dalmady in some detail — appeared Tuesday morning.)
When you’re dealing with fraud allegations, especially at banks, it’s important to be cautious. A single fraud allegation from a reputable source can spark a run on any bank, even if the bank in question is entirely kosher. And I’m sure that next week the story will gain legs. But the MSM would love it if they can pin everything on the SEC or some other regulator — even the Antiguan regulator would do, at a pinch. They really hate making allegations themselves, or even giving much credence to the allegations of independent analysts like Dalmady. Or Markopolos.
Update: I just found this astonishingly milquetoast article from Reuters, datelined today:
After reviewing Stanford’s financial statements, Dalmady concluded that it used borrowed money, or leverage, to pump up investment returns.
Er, no: after reviewing Stanford’s financial statements, Dalmady concluded that it was a Ponzi scheme and that Stanford really doesn’t have the money it claims it has.
Anecdotally, the MSM is just now getting serious about this story, with reporters in places like Antigua and Caracas looking for something solid; most of them are convinced that there’s something extremely fishy about Stanford. But the gulf between what they believe and what they feel comfortable actually reporting is enormous.