The mainstream media has finally begun to notice the unusual circumstances surrounding R. Allen Stanford and his Houston-based investment firm, Stanford Financial Group (the latest Chronicle story is here).

Although the firm characterized the various investigations as "routine" in news reports, believe me — it’s never "routine" when the FBI starts nosing around. This is doubtful to end well for Stanford and its investors.

But what’s most remarkable about all this is how long it has taken for the media and regulators to catch on to Stanford. It took blogger Alex Dalmody less than 30 minutes to size up the situation, and it didn’t take Felix Salmon (update here) much longer.

Meanwhile, this Business Week article reports that the SEC has been investigating Stanford for the past three years!

Interestingly, I’ve asked dozens of folks in Houston investment community about Stanford over the years and have never once heard one vouch that an investment in the firm would be a good idea except as an absolute flyer. Nevertheless, I cannot recall even one media article over the years examining how Stanford was supposedly paying its lucrative returns to investors. Sure, the firm advertised well and contributed money to a number of powerful politicians. But I kept hearing from competent investment folks — exactly how is the firm paying those kinds of returns on CD’s again? And then there was that whole false association thing with the late Leland Stanford of Stanford University. How could anyone really take this outfit seriously?

Well, as recent news reports indicate, apparently about 30,000 investors did just that.

Now, it appears that many of these investors are from Central and South America, so maybe those investors didn’t have ready access to the information about Stanford that was available in Houston. But the important point here is that — as with Bernard Madoff — no regulatory agency is ever going to do a better job than the information market in preventing or mitigating fraud loss. I mean really, can you imagine how an investor who bought a Stanford CD during the past three years is feeling toward the SEC right now?

Thinking that the government can prevent a slick con man from fleecing investors is about as rational as investing one’s life savings with Stanford Financial Group.