From the AAP
The American Academy of Pediatrics recommends that you keep the stump clean and dry.
- When changing, arrange the diaper so the stump is not under the diaper, this prevents it from getting wet, and allows it to dry out naturally over time.
- When cleaning the infant, do not submerse the stump. A sponge bath with a damp cloth is preferred.
The stump should dry out and fall off in a few weeks. There may be a little bloody spotting from the navel at that time, but any active bleeding should be tended to by a doctor immediately.
There is a small risk of infection, if your infant exhibits redness and swelling around the navel, or a yellow smelly discharge from the navel, or your infant cries or seems particularly tender when touched around the navel, you should see a physician.
While there is no harm in dabbing the cord stump with alcohol, there is no benefit to this treatment, and it adds an extra step of care that is unnecessary.
The change from recommending alcohol to not recommending it happened in our hospital around 2005. I imagine some providers still recommend it, and others probably moved away from it much earlier. Having had several children with the alcohol treatment and several without, I haven't noticed a difference. Specifically, the cord stumps didn't fall off noticeably sooner or later under either treatment plan, and we never experienced any infection.
I suspect alcohol treatment may give fussy parents something to do that makes them feel like they have a little control over an unpredictable process.