Paraguay's Ueno Collapse Puts Political Power Under Scrutiny

Thousands of Paraguayans demanding access to frozen savings and accountability for Ueno Bank's collapse clashed with police firing rubber bullets and pepper spray this week. The bank failure locked nearly 3 million customers out of their savings; the police response met people in the street as state institutions moved to contain the political crisis.

Customers Pay for the Collapse

The Central Bank said it was working to compensate hundreds of thousands of people who were locked out of their accounts. It reported that 1.2 million Ueno customers had received partial or full reimbursement of insured deposits under Paraguayan law. Those figures describe payments under the law, while the collapse had already shut millions of customers off from their savings.

Paraguay's largest teachers' union, with more than 40,000 members, plans to begin an indefinite national strike Monday to press for protection of public pension funds. That is an organized response outside the halls where the crisis has been managed: workers are using a strike to demand safeguards for funds that lawmakers accused Peña of directing to the bank.

"He must go, but not home. He must go to a maximum-security prison," opposition Sen. Yolanda Paredes told reporters. "The public is fed up with impunity." Her demand came as prosecutors pursued a criminal investigation, and as Congress debated Peña's removal.

A Political Reckoning, Not a Bank Refund

Prosecutors on Friday ordered the arrest of Peña and former Central Bank chief Carlos Carvallo as part of an investigation into alleged breach of trust and other offenses tied to Ueno Bank's collapse. Peña was transferred to a military base late Friday as hundreds of protesters gathered outside his home. Drone footage by Paraguay's Telefuturo showed him arriving at the attorney general's compound Saturday in a black SUV escorted by police. He wasn't handcuffed.

The Senate removed Peña in a unanimous vote soon after the arrest order. The vote came three days after regulators seized Ueno Bank, freezing nearly 3 million customers' access to their savings and setting off a political crisis. Vice President Pedro Alliana replaced Peña and began naming a new Cabinet Saturday. The change at the top came amid the unresolved question of customers' access to their money.

Lawmakers accused Peña of using political influence to direct hundreds of millions of dollars in public funds to Ueno while regulators overlooked risky insider lending. Those are lawmakers' accusations; Peña has denied wrongdoing. The investigation targets alleged offenses, not a proven finding of guilt.

Who Gets to Leave, Who Gets Left Waiting

Peña submitted his resignation Thursday, but Congress rejected it and proceeded with an impeachment trial. Opposition lawmakers said they wanted him removed to prevent him from leaving office with immunity. The dispute over his status played out through Congress, prosecutors and police, while customers faced frozen accounts and the Central Bank's reimbursement process.

In a farewell message released shortly before his ouster Friday, Peña said he hoped his departure would spare Paraguay further harm. "I do not want my presence to be a cause of greater division or instability," he wrote. "My responsibility is to put the country above my personal fate."

The removal of U.S. President Donald Trump's ally marks Paraguay's biggest political crisis in more than a decade, the report said. The country has 6 million people and returned to democratic rule in 1989; since then, it has mostly been governed by the conservative Colorado Party. Political offices changed hands. The bank's customers and the teachers preparing to strike remain the people demanding protection and answers.