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Will the Stanford affair cause a run on worldwide banks?

The ongoing criminal investigation into the affairs of cricket tycoon Allen Stanford has caused mayhem in the Caribbean where customers of the company are literally queueing to take their deposits out of Stanford bank branches in Antigua, Colombia, Panama, Peru and Venezuela. While there is no concrete evidence at the moment of any criminal activity, the US authorities are currently investigating returns from an array of Stanford investment businesses.

Many people are comparing the alleged $8 billion fraud to that of the Madoff affair which has seen $50 billion of investor funds put at risk. Stanford International bank itself has over 30,000 clients in 131 countries around the world and many customers are seriously concerned about the safety of their banking deposits. If the substantial withdrawals being experienced in the Caribbean and South America are translated into other countries around the world we could see genuine panic appearing with regards to the worldwide banking sector.

While it would be unfair to comment on the details of the alleged Stanford situation, yet again we are seeing problems where investors are chasing investment returns which often look "too good to be true". We await further details of the Stanford investigation by the US authorities, with other governments around the world set to become involved, in what could turn out to be a very complicated situation.

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